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 Business News | May 2007 
Mexico´s Ethanol Plan Meets Resistance
 Alex Manda - Herald Mexico
Mexico´s plans for a big push to encourage the use of bioethanol in fuel are caught in a wrangle with the state oil monopoly Petróleos Mexicanos (Pemex), according to Osiel Castro de la Rosa, a National Action Party (PAN) deputy from the state of Veracruz.
"On Thursday, we had a meeting with the Pemex board ... they had technical objections to ethanol, saying that adapting facilities would be too expensive," Castro said at sugar cane industry forum in Veracruz.
"These objections (have been) ... overcome. We now have to design a minimum pricing scheme that will be profitable for Pemex and will offer sugarcane producers an income," he said.
The issue is crucial in Veracruz state, which produced around 40 percent of the nation´s sugar cane last year.
At the end of April, Congress passed a bill to promote the use of ethanol made from sugar as part of the nation´s gasoline mix, instead of imported additive methyl tetra butyl ether (MTBE), an additive which is already banned in many U.S. states.
However, President Calderón still has not signed the bill into law, in large part because of Pemex objections, experts at the forum said.
"The import price of MTBE was crucial. Because of transport costs the company comes out better if it is produced in Mexico. It has to be imported by sea, not via pipelines. The expense of transport was the factor that made understand," Castro said.
The April legislation called for the replacement of MTBE, which represents 6 percent of Mexico´s gasoline by volume and called for "substituting MTBE imports with the production of ethanol, saving a substantial amount of resources which we are currently spending on imports," he added.
In November last year, Sergio Trindade, president of SE2T International, a consultancy that led a Mexican government study of biofuels, said Mexico could save US$2 billion a year by switching from imported MTBE to domestically produced ethanol.Trindade also said that doing so would require nearly 412,000 cubic meters of ethanol a year by 2012.
Speaking at the Veracruz conference, Eduardo Macías, a senior administrator at the Fondo de Empresas Expropiadas del Sector Azucarero, a state body that administers sugar companies that have gone into bankruptcy, also complained that the legislation left a lot of gray areas.
"To give just one example, the legislation says ethanol will be 10 percent by volume in major urban centers, but does not say which cities are considered major urban centers," he said.
Meanwhile, some sugarcane producers who are interested in bioethanol have decided that it makes more sense to bypass government-brokered plans altogether.
Porfirio Alva Pérez of Chontalpa Cane Workers United, which is based in the state of Tabasco, said the association has agreed to build a joint venture ethanol facility with German biotech and engineering firm Frings.
"We are going to start building a 119,000-liter-a-day plant in October this year," Alva said. "If other associations see it is working, we are looking at another 500,000-liter facility that we could start building the following September," Alva said.
The deal came about because members of the 3,500-strong Chontalpa cooperative had traveled to Spain, then to Germany, to investigate bioethanol.
Frings is supplying 80 percent of the projects start-up costs and will have a 30 percent stake initially, and will buy 100 percent of the ethanol produced.
"We had initially approached government officials about this, but they weren´t interested," Alva said. |
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