Petrojam, Coimex negotiating new ethanol deal
published:
Friday | February 22, 2008
John Myers Jr., Business Reporter
The Petrojam Ethanol Dehydration Plant at Marcus Garvey Drive, Kingston. - File
Petrojam Ethanol Limited (PEL) is to revert to full Government owner-ship at the end of May if current negotiations for an extension of the partnership agreement with Brazil's Coimex Group is not finalised.
Coimex has a 20 per cent stake in the operation of the dehydration facility plant, while the other 80 per cent equity is held by state-run refinery Petrojam.
Chairman of PEL, Karl James, told The Financial Gleaner that the current negotiations for a new partnership would replace the existing three-year pact which comes to an end in May.
Completing negotiations
He said the aim is to complete those negotiations before the existing agreement ends in order for the new one to take effect in June.
James said Tuesday that neither the parameters of the new partnership nor its tenure had been finalised, but noted that it would renew the existing arrangement "with maybe different terms and expand into another facility if we can agree on the conditions."
In 2004, Petrojam entered into an agreement with the Coimex Group, one of the largest sugar trading companies in Brazil, to jointly refurbish the Ethanol Dehydration Plant. Both companies agreed to share the US$10.5 million cost to upgrade the plant that would produce fuel grade ethanol from sugar cane feedstock sourced by Coimex from Brazil. The Government in return would repay Coimex's share of the cost over a three-year period which comes to an end in May.
Jamaica, which is the largest supplier of fuel-grade ethanol to the United States under the Caribbean Basin Initiative (CBI), last year exported some 79 millions gallons of ethanol to the US, which earned over US$174 million. The volumes shipped were substantially higher than the 50 million gallons exported in 2006.
PEL is currently scouting for suitable land space to construct another dehydration plant in order to expand production of the biofuel from the current 40 million gallons to 100 million gallons.
James said they were currently negotiating for properties in the Corporate Area and Old Harbour to build the new facility, whichever turns out to be the better deal.
