Israel's Merhav Group considers $700 million biofuel investment in East Nusa Tenggara, Indonesia

Biopact.com

Jatropha curcas trees raised in Indonesia's East Nusa Tenggara province have a big potential to yield biofuel feedstocks, prompting Israel's project financing company Merhav Group to consider an investment of up to US$700/€517 million.

Merhav Group's president Gideon Weinstein outlined the plan during a coordination meeting with Kupang district head Ibrahim Agustinus Medah, after visiting a jatropha plantation established by the local administration there in 2006.

On the occasion, Weinstein was accompanied by Jacques Eshel and Yosef Ziv, other executives of Merhav Group, and officials of PT Manhattan Capital comprising Sudiro Andiwiguna, Setiawan Sudei, Muhammad Ansor and Herman Ndoen. Jakarta-based PT Manhattan Capital is a national company partnering with the Merhav Group for the development of biodiesel energy sources in Indonesia.

The Merhav Group, which invests in energy, infrastructure, agriculture and agro-industrial projects globally, would in a first stage invest US$350/€257 million in 50,000 hectares (124,000 acres) of jatropha plantations in Kupang district. In the longer run, the company would increase its investment to US$700 million to establish 100,000 hectares (247,000 acres) in the same region.

The Kupang district is located on the island of Timor in the southeast of the province (map, click to enlarge), where the climate is dry tropical. With leading expertise in agricultural water and irrigation management derived from Israeli research, the company is confident that the biofuel crop can be grown in the relatively arid region with a minimal input of water.

Weinstein said his company would invest in the entire production chain, including transportation facilities from energy plantations to warehouses and biodiesel production plants. A team will be sent to East Nusa Tenggara to prepare a feasibility study for the large project:

PT Manhattan Capital has told Indonesia's agriculture minister and the energy and mineral resources minister about the projet, adding that the companies would want to cooperate with state-run agriculture firm PT Rajawali Nusantara Indonesia (RNI) to develop the jatropha curcas plantations.

Meanwhile, Weinstein said a port would have to be developed to allow the biofuels to be exported. This facility would be built on five hectares of land. Ibrahim said the Kupang district administration would organise a meeting with the relevant agencies to study the feasibility of such a dedicated port in the Sulamu area.