Malaysian, Davao companies to go into joint venture for jathropa plantation

Antonio Vergara, president of the Davao City Multi-Culture Development Corporation, said they have scheduled agreement signing in December and would proceed with planting operations in January 2008.

He said the state-owned Palm Oil Industrial Cluster (POIC) Sabah Sdn Bhd would take charge of providing equipment and financing while the local firm on plantation expertise in the 60-40 ownership joint venture.

Vergara, a former city councilor, said they have an initial capitalization of P35 million for a 1,000-hectare plantation.
He said the joint venture would plant jathropa to an area covering at least 60,000 hectares in the Marilog and Paquibato districts in upland Davao City.

Vergara, in the business matching meeting with Rose Pun, the Malaysian firm's representative for sales, said they are targetting at least 269,000 hectares of plantations in the Southeastern Mindanao region.

He said if the Malaysian firm could put up the refinery complex to process jathropa biodiesel fuel, they will initially produce 160,000 liters per hectare per year.

He said a feasibility study on the proposed Marilog and Paquibato plantations showed they could provide employment to two to three local residents per hectare to tend to the plantation, or at least 120,000 people.
He said, however, he could not reveal more details of the project.

The plantation would be located at the 1,000-hectare (IFMA) Industrial Forest Management Agreement area in Malicongcong, Paquibato district.

Vergara vouched for jathropa as a forest tree, which he said could be used in the government-led reforestation projects.

He denied reports about jathropa's alleged questionable biodiesel quality, citing extracts from some varieties produce only 15 percent oil. He said they are using a native jathropa variety called "hanga" which has been found to be a "good source" of oil.

He said many Mindanawons still laugh at the idea of jathropa as a source of biodiesel and as a viable business.

But he said with the meeting it is clear how fuel firms consider the potentials of jathropa.

Vergara said pre-blended jathropa biodiesel could sell at P30 per liter in the market, which he said should help bring down the cost of transportation by providing an alternative fuel.

He said they are already making money with jathropa seedlings by selling to the Southern Philippines Development Authority (SPDA) and other smaller outfits who are going into the jathropa business.

He said they are not selling to the Philippine National Oil Company (PNOC) because it is allegedly buying jathropa seeds at a lower price, P3.50 per kilo. He said it is usually P5.

He said they would consolidate smaller suppliers in the region to get the right volume of supply.

Vergara said he also met with representatives from the United Kingdom-based MCC Capital Projects Limited, which was introduced later by the Mindanao Business Council as an alternative source of funds for local projects.

He said he expected fast growth for the industry in the coming years. It takes six to eight months from planting, to harvest jathropa seeds for processing.

The Philippine Biodiesel Act was enacted into law to help cut down dependence on fossil-fuel sourced fuel. Along with coco biodiesel and ethanol, jathropa is among the biodiesel sources already picking up among farmers and businessmen.