2/10/05 (The Edge Daily) - Europe’s largest and fastest-growing supplierof biofuel BIOX Group BV is coming to Malaysia with big plans, includingsourcing up to 300,000 tonnes of biomass consisting of palm oil and palmoil by-products annually by the beginning of 2007.

The sourcing will be carried out through contracts and joint ventures withMalaysian corporations in the palm oil industry.

The Netherlands-based biofuel group will set up a local office in KualaLumpur this month with the official launch expected on Nov 24. It hasappointed Valentine Khoo as general manager for the Malaysian office.

In an interview with FinancialDaily , BIOX Asia director of finance EdgareKerkwijk says the group has signed a memorandum of understanding (MoU)with Golden Hope Plantations Bhd for a 10-year contract for the latter tosupply 100,000 tonnes of biomass a year.

He says BIOX is currently in discussions with another local company forthe supply of 100,000 tonnes of palm oil and palm oil by-products a year.

The group is also looking to set up a joint venture with a local companyby year-end to develop an oil palm plantation with a size of 15,000ha to20,000ha. Kerkwijk adds that BIOX is searching for similar joint venturesin Indonesia.

"We are currently discussing with a company in Indonesia and a largecompany in Malaysia to identify 15,000 to 20,000 hectares which canproduce 80,000 to 100,000 tonnes of biomass a year," he says.

The 400,000 tonnes of palm oil and palm oil by-products in total will beprocessed into biofuel for four 50 megawatt power plants being constructedby BIOX in the Netherlands, which are expected to be completed by the endof 2006. Each power plant will require 80,000 to 100,000 tonnes ofbiofuel.

This year, BIOX recorded a turnover of €100 million (RM453.32 million) andKerkwijk expects double-digit growth in 2006.

He says BIOX currently supplies 500,000 tonnes of biofuel to customers inWestern Europe such as the United Kingdom, Sweden, Finland, Belgium andGermany. Europe is the largest consumer of biofuel in the world.

"The Kyoto Protocol requires industrialised countries that have signed thetreaty to reduce carbon dioxide emissions," Kerwijk says.

As for the Asia Pacific region, he says demand is still low. However, hefeels that BIOX’s presence in Malaysia and government initiatives willhelp promote the advantages of biofuel in the region.

On Sept 26, Tenaga Nasional Bhd signed an agreement to purchaseelectricity generated from a small renewable energy power projectdeveloped by MHES Asia Sdn Bhd under the small renewable energy powerprogramme.

Meanwhile, Khoo says: "Malaysians have realised fossil fuels are adepleting resource and it was time to look at other forms of energy."

Cost is another issue. At the moment, Kerwijk says biofuel is not acheaper alternative to fossil fuels but rising costs in crude oil indicatethis will not remain the trend.

Kerwijk says BIOX has plans to set up a power plant in Malaysia and is intalks with several local palm oil companies about possible joint ventures.