Japanese-backed group to run SMC’s energy project in Vietnam

Philstar.com By Donnabelle L. Gatdula Updated July 17, 2009 12:00 AM

MANILA, Philippines – The Japanese-backed firm Solutions Using Renewable Energy Inc. (SURE) has bagged the contract to construct and operate San Miguel’s biggest integrated waste-to-energy project in Vietnam.

SURE said the deal was entered with San Miguel Pure Foods (VN) Co. Ltd. (SMPFV), the Vietnam-based joint venture between US meat manufacturing giant Hormel Foods Corp. and San Miguel, the largest food and beverage conglomerate in Southeast Asia.

SURE spokesman Clarence de Guia said the Vietnamese government has allowed the company to form a 100-percent foreign-owned subsidiary.

Thus, SURE Vietnam Joint Stock Co. will be the vehicle to implement the renewable energy (RE) project for SMPFV under the build-operate-transfer (BOT) scheme.

SURE controls a 60-percent stake while Japan’s MGL Leasing Corp., keeps the remaining 40-percent ownership in SURE VNJSC.

“As far as we know, the SURE project marked the first time a Philippine-based company has won an overseas bidding for a waste-to-energy contract,” De Guia said.

“SURE is also honored to find out that the waste-to-energy project is so far the biggest venture of that nature for Vietnam, and it will be integrated into the largest single-site hog farm in that country,” he added.

The renewable energy facility, costing $4.4 million, will rise at Cau Sat Hamlet, Lai Hung Village, Ben Cat District in Binh Duong Province, where SMPFV operates a hog farm.

The project will convert to biogas waste from the hog farm to fuel a 2.3-megawatt power plant.

De Guia said aside from disposing and converting waste into fuel, SURE also has committed to construct a plant for converting sludge into fertilizer, as well as a zero-discharge waste treatment plant that will recycle used water from the farm into 100-percent bacteria-free water.

In exchange for all the benefits it will get from the facility, SMPFV will pay SURE a service fee for every kilowatthour of electricity to be generated by the power plant. The service fee will last for only eight years, corresponding to the effectivity of the BOT contract. At the end of the contract, SURE will turn over the entire facility to SMPFV for free.

Aside from power and fertilizer sales, income from the project includes expected proceeds from selling certified emission reductions (CERs) under the Clean Development Mechanism (CDM) of the Kyoto Protocol on stabilizing unwanted greenhouse gases.

Under the Kyoto Protocol, rich countries must cut greenhouse gas emissions by an average of five per cent by 2012, compared with their levels in 1990. These rich countries can make up for their commitments under the treaty by funding greenhouse gas reduction projects, like waste-to-energy facilities, located in poor countries. These environment-friendly projects earn CERs or carbon credits, which represent the amount of carbon dioxide avoided by these clean projects.

The value of global trading for carbon credits topped the $60-billion mark last year.

According to De Guia, SURE has organized a multinational group of partners and suppliers to package the Vietnam project. Aside from MGL Leasing as equity partner, SURE has tapped companies from India and China as equipment suppliers.

SURE has also partnered with two Danish firms, AEM Engineering and Gosmer Biogas, for the design of the Vietnamese facility, and with Philippine-based AV Garcia for the project’s power component.

MGL Leasing, one of Japan’s biggest leasing firms, is also SURE’s partner for a joint venture company that operates several renewable energy ventures in the Philippines.

SURE was organized by a group of RE and environment experts that include retired officials and consultants from the Department of Environment and Natural Resources. De Guia himself headed the legal department of the DENR when Elisea “Bebet” Gozun was the agency’s head.

News Link: http://www.philstar.com/Article.aspx?articleId=487364&publicationSubCategoryId=66

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