May 12, 2006

World Bank Uses Brazil as Funding Benchmark

The World Bank is being flooded with requests by developing nations for funding ethanol projects. According to this report from Reuters, Brazil's sugar cane ethanol economics is used as a benchmark for determining which international projects will get World Bank support.

International deployment of alternative fuel biorefineries will become increasingly important for reducing the economic impact of rising oil prices. The International Energy Agency estimates that, at best, ethanol could make up 10 percent of world gasoline by 2025.

Some excerpts from the report:


World Bank "flooded" with ethanol fund requests
Reuters, May 12, 2006

"We've been flooded with requests from lots of countries. There's some requests from Latin America, we've had several from Africa and one or two in East Asia," Marcelo Lessa of the International Finance Corp. (IFC) said from a cane-ethanol mill in Brazil's Sao Paulo state.

Since November, sugar cane project funding requests -- largely in the feasibility stage -- have come in from Mali, Guatemala, Honduras, the Philippines, Colombia, Saint Kitts & Nevis, Mozambique, Tanzania, Egypt and Turkey.

"We'll turn several (plans) down because we believe ethanol production has to be competitive with costs in Brazil; otherwise you might be hurting a country economically," Lessa said.

Projects that are more likely to be approved are in countries with a well-established sugar cane infrastructure such as Colombia, Peru, Mozambique, Angola, Thailand and Australia.

"India's a very large producer. They have efficient mills but they have very high costs because of problems on the agriculture side," such as small farms, he said.

Another benchmark is costs, using Brazilian output costs as the standard. That cost is about $227 per cubic meter, but an 11 percent rise in Brazil's real against the dollar from January to April has made some proposals uncompetitive.

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