SOFIA (Bulgaria), September 24 (SeeNews) – Bulgarian edible oil producer Papas Olio plans to invest up to 20 million euro ($29.4 million) to build a biofuels plant with an yearly output capacity of 100,000 tonnes at the country’s northern Black Sea coast, its CEO Georgi Tashev said.
The plant will be built with an option to increase its output but not above 200,000 tonnes, Tashev told SeeNews in a recent interview.
The investment, to be financed through loans, will be split in two stages. Following the first portion of investments Papas Olio will produce oils that can be used both for refining edible oils and for biofuels. In the second stage the company will install biofuels production capacities.
“We can stop at the first stage,” said Tashev, adding that the company's investment and expansion plans strongly depend on international demand for its output.
“I hope we'll complete the first stage next year,” he said.
Papas Olio has also announced plans to go public in 2009 to finance a capacity expansion.
Public offerings on the stock exchange in Sofia have faced difficulties since the beginning of the year as global volatility has made investors cautious. Some companies delayed plans to go public after local bottle cap manufacturer Herti sold just 0.11% of its planned capital hike through an initial public offering earlier this year.
Papas Oil has recently won a tender for three land plots at the Black Sea port of Balchik, where it will build the edible oil-to-biofuel processing facilities.
Tashev's biggest concern about the investment plan is the lack of adequate regulations in the domestic biofuels market and an overall unfavourable business climate in that market niche, a result of weak law enforcement that has drawn strong criticism from the European Union, which Bulgaria joined in 2007.
Bulgarian biofuels producers unanimously agree that if the state exempts mixes of fossil and biofuels at a proportion equal to the current domestic standard for mixing 95% fossil with 5% alternative fuels, the domestic market will come to life.
They say the Economy and Energy Ministry has failed to nominate an authority to monitor the biofuel content in the fuel mix, although all biofuels are exempt from excise duty. For that reason, currently no fuel traders in Bulgaria are mixing fossil fuels with biofuels.
The company, which produces fodder and flour, and trades in grain, hopes to double sales to some 230 million levs ($168.2 million/114.1 million euro) this year, as output rose after drought largely devastated crops in the country in 2007, said Tashev.
Papas Olio is 30%-owned by local retailer Agro Lega. Tashev and Greek businessman Papatheodoru Georgios own 35% each, according to the latest data from the Bulgarian corporate register Apis.
The company’s share capital is 23 million levs, divided into the same number of shares. It is based in the southeastern city of Yambol, where it has an edible oil factory.
(1 euro = 1.95583 Bulgarian levs)
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