Local firm and foreign partner to build 15 bio-oil plants

Bio-oil, or pyrolysis oil, is extracted from biomass.

Anand said that up to 70% of the funding would come from debt and the rest via equity participation with joint-venture partners.

He said Premium Renewable had entered into an agreement with a leading local plantation company to build five plants over the next five years. Work on the first plant is scheduled to start in the second quarter of 2011.

“We’re also in discussions with two other plantation companies for other plants,” Anand said, adding that the company already had the ability to build 30-MW pure bio-oil based power plants and would be able to convert bio-oil to transport fuels by 2012.

He said the company was also in talks with one of the largest independent power producers in the country to explore the possibility of a partnership in power generation, not just for local consumption but also for the regional.

“We’ll know the outcome within the next two months. They’ll be making a site visit to the commercial plant at the end of the month and we expect them to decide after that,” Anand said.

He calculated that of the 60 million tonnes of biomass that were produced yearly by the local palm oil industry, 32 million tonnes were from empty fruit bunches and fibre, which could produce around 11 million tonnes of bio-oil or 41 million barrels of crude oil with revenue of around RM9bil.

Anand is one of three shareholders of the company. The others are corporate figure Datuk Razman Hashim, who is chairman, and Singaporean entrepreneur Patrick Wee.

Anand said bio-oil was a commercially viable alternative fuel because it could be produced “with high efficiency” and had a multitude of uses just like crude oil.

He said the uses included power and transport fuels to chemicals. “It is transportable as well again just like crude oil.”

Anand is hopeful that the new feed-in-tariff (FIT) mechanism, to be introduced at the earliest around the second quarter of next year, would provide a more conducive environment for the local renewable energy industry.

“The FIT will provide an avenue for tariffs to be higher than the current average, making the industry more attractive (in terms of investment returns like internal rate of return and net present value) and payback period shorter,” he pointed out.

Anand said this was in addition to other FIT guarantees such as utility company legally obliged to accept all renewable power produced by private renewable power firms.

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