Eastern Petroleum to invest P4.6B in biomass units

Electricity output to augment supply in power-starved Mindanao

EASTERN Petroleum, through its renewable energy arm Eastern Renewables, plans to invest roughly $108 million (around P4.6 billion) in biomass power facilities that will eventually add 40 megawatts to the Mindanao grid.

Once completed, the plants will comprise the single biggest biomass power project in the country, according to Eastern Petroleum chair Fernando Martinez.

In a briefing yesterday, Mar- tinez said the company was in the final stages of land acquisition for the first phase of the project, which involves the construction of a $60-million, 20MWfacility in Agusan.

The second phase, which will commence once electricity demand in the area grows, calls for the construction of another 20-MW plant to the tune of roughly $48 million, or 20 percent less than the cost of the first phase.

According to Martinez, the company expects financial closing for the first phase of the project by the first quarter of next year, after which Eastern Renewables will start construction. The first 20-MW unit is expected to start commercial operations by late 2015.

Eastern plans to use wood chips and agri wastes to serve as feedstock for the biomass plant.

A stable supply of feedstock is assured as the company has a plantation and is looking at the possible reforestation of an additional 4,000 hectares of idle land, pending the approval from the Department of Environment and Natural Resources.

“The project is sustainable in the area because the people in Agusan del Norte and Agusan del Sur, culturally, are into tree cultivation. [ We will be using] three- to seven- year old industrial trees as source of woodchips, which will be used as feedstock,” he explained.

For a 20-MW facility, Eastern will need 5,000 trees a day.

According to Martinez, the host communities are “excited” about the project because they stand to benefit from an estimated 30 percent of the gross income from the biomass facility, which is expected to generate at least 500 new direct and indirect jobs and spur economic activities.

Martinez added that the company would proceed with the biomass project even if feed-intariff rates will not be issued, unlike most renewable energy developers who have chosen to wait for the issuance of these rates before proceeding with their projects.

Developers eagerly await the issuance of the FIT rates as these will assure developers of fixed cash flows from their projects.