05/09/2010 (Food Business Review.com) - Equatorial Palm Oil (EPO), a sustainable oil palm plantation developer in Liberia, has inked a memorandum of understanding (MOU) with Biopalm Energy, a subsidiary of Siva Ventures of India, to create a 50:50 joint venture (JV) company worth $60m.

The establishment of the JV will be contingent upon EPO shareholder and other required regulatory approvals.

The Liberian company said that this move has been made so it can drive the growth of its c169,000 hectare land position and palm oil operations in the country.

As per the non-binding MOU, Biopalm Energy will initially make an investment of $22.5m in cash, and also arrange and guarantee a $30m loan to the JV.

EPO will invest $7.5m in cash to the JV which will, on completion, hold all of EPO’s current land position in Liberia.

The Liberian company has plans to plant 50,000 hectares of oil palm plantation within 10 years, aiming at crude palm oil (CPO) production of 250,000 tpa, increasing to 100,000 hectares planted.

The production of CPO is scheduled to begin in the fourth quarter of this year with the first palm oil processing mill of the company already under development.

EPO chairman Michael Frayne said that this funding agreement with the Siva Group is fantastic news for the company as it will significantly mitigate the financial risk attached to the project.

“We have already made significant strides forward in our development plan with the establishment of nurseries and the construction of our first mill which is underway, Frayne said.

We will now accelerate our activities as we build a West African focussed palm oil company.”