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Petrojam suspends ethanol production

Published:Friday | April 16, 2010 | 12:00 AM
Phillip Paulwell, opposition spokesman on energy. - File

Petrojam has reportedly shut down production of ethanol, idling the 40-million gallon capacity plant for lack of feedstock, one lawmaker is speculating.

Petrojam Ethanol Limited (PEL) up to press time was yet to comment on questions that it requested be sent about the operation, but Energy Spokesman Phillip Paulwell (PNP-East Kingston) said in Parliament Tuesday that the plant's supply of raw material from Coimex of Brazil appeared to have faltered.

"The news learned in the Standing Finance Committee that Petrojam Ethanol was not operating is quite alarming," said Paulwell in his contribution to the Budget Debate.

"This is apparently due to the lack of raw material from Brazil. The Government must accept full responsibility for this state of affairs as, by unceremoniously terminating the arrangement we had with Coimex, our source of raw material has been extinguished."

Coimex up to 2008 was a joint venture partner in PEL under a 2004 agreement that swapped equity in the plant for supplies of wet ethanol for processing into fuel grade ethanol.

Coimex had wanted to extend the partnership, but the Government chose instead to include the plant as sweetener for a deal with Infinity Bio-Energy in the divestment of six sugar factories.

The sugar deal eventually faltered.

"The termination of the deal with Coimex came as a result of the misguided and botched excursion with Bio Infinity," said Paulwell.

"That has cost us dearly, including the over $300 million that the Government had to fork out to settle the premature termination of Coimex's contract."

The closure of PEL, from all indications, will be temporary. The Government is projecting that the plant will produce 36 million gallons of ethanol this fiscal year at a rate of 116,000 gallons per day.

The plant has 54 days of scheduled maintenance.

PEL, after a $366-million loss in 2008/09, is estimated to have returned to profit last year, reporting a surplus of $100 million and is projecting for 39 per cent higher profits of $139 million in this period.