JCL Presentation OPSI June 22 06

8/6/2019 JCL Presentation OPSI June 22 06

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7th OPSI National CONVENTION

Theme:ALTERNATIVE FARMING FOR ANEW SUGARCANE INDUSTRY


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THE PHILIPPINE SUGAR INDUSTRY

A Presentation to the OutreachProgram for the Sugar Industry

Foundation Conventionby

Administrator James C. LedesmaSugar Regulatory Administration


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Towards a Multiple ProductTowards a Multiple Product

Sugarcane IndustrySugarcane Industry

Adm. James C.Adm. James C.LedesmaLedesma

SUGAR REGULATORYSUGAR REGULATORYADMINISTRATIONADMINISTRATION

OPSI Alumni National ConventionOPSI Alumni National Convention BacolodBacolod City June 22City June 22--23, 200623, 2006


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Under a Multiple Product Sugarcane Industry

Sugar is still the Major Product

TH E CRITICAL MASSTH E CRITICAL MASS

216,4381.5582.1132005-2006*

137,3521.9502.1502004-2005

137,0002.0682.3382003-2004

137,3522.0592.1612002-2003

US QUOTA

Tons

WITHDRAWALS

Million Tons

PRODUCTION

Million Tons

CROP YEAR

* As of JUNE11, 2006


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Raw Sugar Production/Consumption,CY 99/00 to 05/06 (in Metric Tons)

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Production

Consumption

Production 1,619,613 1,805,203 1,898,501 2,161,000 2,338,000 2,150,746 2,113,000

Consumption 1,928,000 1,908,000 1,942,000 2,059,000 2,040,000 1,950,585 1,900,000

CY 99-00 CY 00-01 CY 01-02 CY 02-03 CY 03-04 CY 04-05 CY 05-06

Sugar self sufficiency attained in CY 2002-03.

CY 03-04 record is a 20-year high.

* As of June 11, 2006


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Total Tons Sugarcane Harvested

CY 2000-01 to CY 2004-05

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

CY

200

0-01

CY

200

1-02

CY

200

2-03

CY

200

3-04

CY

200

4-05

CY

200

5-06

TonsSugarcane

CY 2000-2001 21,113,485CY 2001-2002 21,094,456CY 2002-2003 23,623,224CY 2003-2004 25,840,818CY 2004-2005 22,510,607CY 2005-2006 22,880,663


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Sugar Price History

500

600

700

800

900

1000

1100

1200

CY

2000

-01

CY

2001

-02

CY

2002

-03

CY

2003

-04

CY

2004

-05

CY

2005

-06

CompositePrice

CY 2000-01 859.28

CY 2001-02 859.01

CY 2002-03 841.87

CY 2003-04 738.87

CY 2004-05 785.18

CY 2005-06* 1,108.31

* As of June 15, 2006


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BIOETHANOLBIOETHANOLBIOETHANOLFuel ethanol and otherbiofuels have regainednationwide prominence

due to rising oil prices,urban air pollution,technologies inproduction, & the need tosupport agricultural

industries.


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ETHANOL

CLASSIFICATION BYCOMPOSITION

HYDROUS ALCOHOL

Hydrous ethanol contains about

5% water. It is used in thebeverage industry. It is also usedas a pure fuel for vehicles withmodified engines. (Used inALCOGAS PROGRAM with about

10 % blend)

HYDROUS ALCOHOL

Hydrous ethanol contains about

5% water. It is used in thebeverage industry. It is also usedas a pure fuel for vehicles withmodified engines. (Used inALCOGAS PROGRAM with about

10 % blend)

ANHYDROUS ALCOHOL

(OR ETHANOL)

Anhydrous grades of alcoholare always below 0.5% water. Itcan be used as an additive togasoline, creating gasohol.

ANHYDROUS ALCOHOL

(OR ETHANOL)

Anhydrous grades of alcoholare always below 0.5% water. Itcan be used as an additive togasoline, creating gasohol.

ALCOHOL(Regular vs. Ethanol)


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Also known as

Ethyl alcohol

OrGrain alcohol

RenewableDry alcohol

At least 99.5 %purity


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SourcesETHANOL


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BENEFITS OF USING

ETHANOL as BIOFUEL

* NON-POLLUTING

* AVOIDS GREENHOUSE

GAS EMISSIONS

* ENERGY-EFFICIENT

I. ENVIRONMENT & ENERGY

* HIGHER OCTANE

* Renewable


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* DOLLAR SAVINGS

II. ECONOMY & DEVELOPMENT

* JOB CREATION

* COUNTRYSIDE DEVT.

* PRODUCT DIVERSIFICATION& INCREASED FARMERS INCOME

* NEW INDUSTRY INFRASTRUCTURE

* REDUCED DEPENDENCE ON IMPORTED FUEL

* INSULATION FROMVOLATILITY OF OIL PRICES


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BIOETHANOL & YOUR CAR

- HIGHER OCTANE

- LOW COST*

-COMPATIBLE WITH ALMOST ALL

CAR ENGINES(Esp. after 1986 models at 10% blend)

* AT CURRENT OIL PRICE LEVELS

-CLEAN FUEL


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WHY SUGARCANE AS SUBSTRATE?


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Ethanol Yield of Major Potential Biomass Raw

Materials

5,20052Sweet Sorghum

2,960370Corn

1,440180Cassava

588280Molasses

4,90070Sugarcane

Ethanol Yield

(liters/ha/year)

Ethanol Yield

(liters / ton)Raw Materials


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ETHANOL VOLUME REQT

5%Blend

10%Blend

ESTIMATED VOLUME OF

FUEL ETHANOL REQUIREMENT

527.612016 2017

502.562015 2016

472.792014 2015

450.642013 2014

424.082012 2013

403.892011 - 2012

379.472010 2011

180.312009 2010

169.232008 2009

160.672007 2008

Estimated Volume of FuelEthanol Requirement (M liters)

Crop Year

( B as ed o n 5 % a n d 1 0 % b l e n d t o 9 0 RON Ga so l i n e Re q u i r e m e n t )


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ROI Table

39.7432.9019.2419.2412.415.5828.3221.431500

44.6237.7824.1224.1217.2910.4626.8920.001400

49.5042.6629.0029.0022.1715.3425.4618.571300

54.3847.5433.8833.8827.0520.2213.386.5524.0317.141200

59.2552.4245.5938.7631.9325.1018.2611.4322.6015.711100

64.1357.3050.4743.6436.8129.9823.1416.319.4821.1814.291000

69.0162.1855.3548.5241.6934.8628.0221.1914.367.5319.7512.86900

73.8967.0660.2353.4046.5739.7432.9026.0719.2412.415.5818.3211.43800

78.7771.9465.1158.2851.4544.6237.7830.9524.1217.2910.4616.8910.00700

P40P38P36P34P32P30P28P26P24P22P20

ETHANOL DISTILLERY PRICECOSTOF

PRODU

CTION

COST OFSUBSTRA

TE

COST OFSUGARCA

NE

(100 LPD, Stand Alone, using Cane Juice as Substrate)

RATE OF INVESTMENT (ROI)


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37.6637.6635.9335.931886.501886.501,4001,400

37.6637.6633.5233.521760.501760.501,3001,300

37.6637.6631.1231.121634.501634.501,2001,200

37.6637.6628.7228.721508.501508.501,1001,100

37.6637.6626.3326.331382.501382.501,0001,000

Cost ofGasoline /

Li (P)

EquivalentCost of

Ethanol /

Li (P)

CanePurchaseper ton

(P)

Price ofSugar

(P)

Result of Bio- Ethanol Study

Price and Cost Competitiveness Of Bio- Ethanol and Gasoline

Fuel Ethanol as Emerging Industry


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296,596TOTAL

70,000Sultan Kudarat/ South Cotabato

32,000Cagayan/Isabela/Bicol

29,486Central Palawan

60,000Maguindanao

35,000Agusan del Norte/ Sur

17,000Saranggani

15,000South Cotabato I

38,110Lanao del Norte

AREA (HA.)LOCATION

POTENTIAL CANE AREAS FOR EXPANSION

Results of Bio-Ethanol Study



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CANE SURPLUS TO SUPPLY

ETHANOL REQUIREMENTCY 2003-2004

SUGAR

PRODUCTION

2.34M MT

CY 2003-2004

PHILIPPINES

EXPORTED

164,000 MTSUGAR

79%

EthanolRequirement

127.4 M

Liters


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MODELS AND INVESTMENTREQUIREMENTS OF ETHANOL PLANTS

INDICATIVE

MODEL FEATURES INVESTMENT

REQUIREMENTSADJUNCT TO Co-sharing of sugar mill P 556M for

SUGAR MILL and distillery of existing 100,000 liters

USING MOLASSES amenities such as power, per day

water, steam and

other utilities

STAND-ALONE Plants may be P 568M for

USING MOLASSES established at a certain 100,000 liters

distance from the mill per day

STAND-ALONE Plants may be P 824M forUSING SUGARCANE established at 100,000 liters

JUICE dedicated cane areas per day

STAND-ALONE WITH Produces electricity P 1.5 Billion for

COGENERATION for own use or for 100,000 liters

distribution to the grid per day


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Sixteen (16) 100,000 LPD distillery plantsincreasing from 5 in 2007 to 16 in 2017 are

projected to be required.

The key factors of a distillery investors return on

investment are the prices of the substrateestimated to be around 70% of his costand the

selling price of ethanol from his distillery.


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1. The expedited and immediate passage of the Law thatshall mandate the development and the use of ethanolas blend to gasoline. This shall create the market and

consequently trigger investment in ethanol.

Challenges Ahead

2.2. Provisions of solutions or alternative schemes to rawmaterial acquisition in lieu of the present sharing system

(cane purchase, etc) which seems to pose some problemswith the eventual inevitable implementation of theprogram in existing sugar milling districts.



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Challenges Ahead

3. Resolution of some concerns by sugar producers, whichcould be a possible stumbling block in their willingness toparticipate, as to which government agency will be incharge of the ethanol production process considering thatthe raw materials (sugarcane) is an agricultural product

and the output (ethanol) is an energy product.

4. Validation of identified areas as potential hosts to

ethanol production. Some of the areas were surveyedabout 10 years back necessitating validationvisits/studies.


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6. While sugarcane is seen as a major substrate forethanol, the development of other potential rawmaterials, particularly sweet sorghum and cassava,must be pursued by pertinent government as well as

private institutions.

5. Assurance that tariff for ethanol shall revert to previouslevels (or even higher, approximating what Brazil exacts)when local supply capability is reached.

Challenges Ahead


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SUGAR is an energy product.


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COGENERATION

The sugar milling industry has the potential tosupport the government in its promotion of energyefficiency while implementing its own rehabilitationand modernization program.

In the Philippines, 29% of the cane crushed in the mills comes out asbagasse. From an average annual cane throughput of close to 21million tons of cane, the country generates about 6 millions tons ofbagasse, which is equivalent to 1,134 kilotons of oil equivalent.

If all the bagasse produced by all the sugar mills are burned efficiently, apotential of 1,278 GWh (gigawatt hour) will be generated per year.

Potential steam savings from improved boiling house operations rangefrom 3 34%, with a total of 267 tons per hour of steam, equivalent of124 tons per hour of bagasse.

FACTS:


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THE MUSCOVADO SECTORTHE MUSCOVADO SECTOR

1. Although the trend is from backyard to commercial productionfor health and commerce consideration, production of less than1% of the national sugar out put is too small, for it to beconsidered a distinct industry.

2. Except for some trading requirements, the production is notunder SRA regulation because of some regulatory constraints.

3. The thrust is to improve quality and penetrate the export markets


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THE FUTURE OF THESUGAR INDUSTRY -

To transform itself into the

SUGARCANE

INDUSTRY


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With these directions, the Philippine Sugar

Industry, if it transforms itself, will havethree potential businesses in the nearfuture:

Sugar PowerEthanol

JCL Presentation OPSI June 22 06

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