Lestari Pasifik Bhd, in an unprecedented joint venture with Russian company Arter Group, is expecting to receive project financing from the Chinese government to build bio-refinery plants in Malaysia and Indonesia to produce biofuel from second generation bioethanol.
The 616 biorefinery plants that will be built in the next five years are estimated to cost RM2bil, with over 300 of them to be set up in Malaysia, according to Lestari chief executive officer Datuk Dr Clement Tan Wei Loon. The plants are to be built side-by-side to lower logistics costs.
“China has great demand as they are coming up with a mandate to use bioethanol as biofuel by end of this year; that is why the Chinese government is willing to finance our project,” he said after a double signing ceremony where Lestari signed a technical undertaking contract with Sirim Bhd and a construction and setup contract with Kilang Minyak Sawit Meru Sdn Bhd.
Currently, Lestari is exporting all of its bioethanol products to China.
“China will be the main market for the moment because locally we do not have any mandate for all cars to use bioethanol fuel,” he said, adding that bioethanol-mixed fuel increased vehicle performance as it created more combustion.
The company hopes to garner a 45% market share in Malaysia and Indonesia when all the plants have begun operations. The first plant located next to Kilang Minyak Sawit will cost between RM3mil and RM6mil. It will be the the first bioethanol plant in Malaysia and will be operational by November.
Lestari is already in talks with Felda to identify locations for all future plants. Three other plants will be set up this year in Johor, Sabah and Sarawak.
Bioethanol is a bioenergy product taken from oil palm empty fruit bunches. It is mixed with fossil fuel for vehicle use, reducing the dependency on petrol and diesel while raising green biofuel awareness.
Lestari is a joint venture between Russian technology system provider Arter Group and Malaysian investors which include companies, private equity funds and individuals. It is planning an IPO by the first quarter of next year to raise RM2.7bil for its operations.
Arter Group is the provider of patented technology called Mechano-Enzymatic Technology System used in 2nd Generation Bioethanol production.
