SAO PAULO (Reuters) - Brazil’s ECB Group said on Monday it has hired banks UBS and Barclays to act as financial advisors for the funding of Latin America’s first large-scale plant to produce renewable fuels HVO and SPK.
ECB plans to start construction of the plant in Paraguay, near the capital Assuncion, around March 2020. Expected capacity is for the production of 20,000 barrels per day of renewable fuel that would be mostly exported to Canada, United States and Europe. The company estimates total capex at around $800 million.
HVO, or Hydrotreated Vegetable Oil, can replace oil-based diesel using a different process from biodiesel which is usually blended into diesel in smaller portions. SPK, or Synthetic Paraffinic Kerosene, is a renewable aviation fuel.
Erasmo Battistella, head of the ECB Group, said on the sidelines of the BiodieselBR 2019 Conference in Sao Paolo that the company has bought the land for the plant near Assuncion and is finalizing the project. Initial operation is projected for 2022.
He said the decision to take the plant to Paraguay was taken due to ample local supply of raw material (soybeans), good export logistics using the Parana river and a favorable tax system for exports.
Battistella believes those factors will allow production from the plant to be competitive in export markets, even when considering freight costs.
Most HVO plants are in Europe or the United States.
ECB Group operates biodiesel plants in Brazil. The company is a partner of Petróleo Brasileiro SA (PETR4.SA) in some biofuel assets.
Reporting by Marcelo Teixeira; Editing by Richard Chang