ADI may defer investing P500 million for Batangas sugar mill

by Lenie Lectura – December 10, 2015

from Business Mirror

ABSOLUT Distillers Inc. (ADI) of the Lucio Tan Group may defer plans to invest P500 million to put up a sugar mill and cogeneration power plant in Batangas.

“It might be put on hold until such time we see it necessary,” said ADI Chief Operating Officer Gerardo Tee.

The planned facility will be developed in an area near ADI’s bioethanol plant.

The planned sugar mill can produce sugarcane juice that can be used as raw material in the company’s bioethanol facility. Tee said ethanol is used in the gasoline blend and comes from agricultural crops such as sugar. The Biofuels Act of 2006 mandated a 10-percent ethanol blend in gasoline.

The company’s bioethanol plant uses molasses as feedstock for bioethanol production. There is a shortage in the supply of molasses from sugarcane farms. Thus, the company is mulling over to put up a sugar mill.

Tee said there is a supply shortage of 600,000 tons of molasses per year. This will prompt ADI to resort to importation.

Tee, who is also the chairman of the Center for Alcohol Research and Development (CARD) Foundation, said there is a pending request before the Sugar Regulatory Administration (SRA) to scrap the import duty on molasses.

“The problem here is that there is an old SRA regulation imposing a P400 fee per ton of imported molasses. We want this removed. If molasses is no longer available here, then we tend to import,” Tee said.

The SRA, Tee said, is open to “minimizing the levy on molasses” during off-peak season, which normally runs from June to November.

“The SRA will still decide on how much, but it’s a good start. At least, they are open to such dialogue,” Tee said. When asked if Tee’s group is amenable to this, he said, “We’re just begging. Going to court is not sustainable.”

ADI was established in 1990 under the company Absolut Chemicals Inc., which was engaged in the manufacture of ethyl alcohol and liquefied carbon dioxide as fermentation by-products used for producing soft drinks, among others.