Basic Energy Corp. said it had signed a memorandum of understanding with Canadian firm Nexum Energy Corp. on construction and operation of an ethanol plant with a capacity of 200,000 liters a day.

In a disclosure to the Philippine Stock Exchange, Basic Energy compliance officer Angel Gahol said the plant would generate up to eight megawatts of “green power, natural gas and organic fertilizers.”

The plant will use cassava as feedstock, he said.

“The ethanol project is in line with Basic Energy’s recent signing of a MOA [memorandum of agreement] with EcoMarketFarms Inc. to greatly expand their cassava project in the Zamboanga Peninsula,” Gahol said. “The MOA is expected to jump start the agricultural operations of Basic Energy and generate initial revenues from the sale of cassava chips to local animal feed manufacturers and, eventually, to supply the feedstock requirements of the planned ethanol plant.”

Under the agreement, Basic Energy will buy EcoMarketFarms’s Tungawan Cassava Project in the province of Zamboanga Sibugay for P12.5 million.

Of the purchase price, P11.25 million will be payable in Basic Energy shares with par value of P0.25 per share. Half of the equivalent 45 million shares will be delivered upon listing of the shares and the remainder will be delivered two years after the effectivity of the agreement.

The P1.25-million balance of the agreed acquisition price will be payable in cash upon signing of the deed of assignment or equivalent definitive agreement regarding the Tungawan project.

Gahol earlier said that while Basic Energy would assume ownership of the Tungawan project, it agreed to enter into a joint venture with EcoMarketFarms that would have EcoMarketFarms manage the project.

Funding will initially come from Basic Energy’s capital funds, he said.

Gahol said net income from the project would be split between the two parties, the arrangement for which would be spelled out in a profit sharing arrangement.

He said that in the interim, Basic Energy would generate revenues from the project through the sale of cassava chips to animal feeds manufacturers, such as San Miguel Corp. Edited by INQUIRER.net