MGE positive to sustain growth as business expands this year

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MACKAY Green Energy (MGE) is confident it will sustain the growth of its business by end-2017, following its 200-percent revenue increase about a-year-and-a-half ago.

Without divulging the exact amount of topline, MGE Chairman James R. Mackay attributed the firm’s improved performance to strong demand for biomass in the country.

“You don’t have enough biomass in the Philippines. So at some stage, the market will come to a point when it will have to purchase. Right now, rather than purchase locally, they’re purchasing from Malaysia and Indonesia,” he told the BusinessMirror in an interview.

Biomass and other clean and renewable-energy (RE) sources, like geothermal, hydro, wind and solar, are among the country’s few competitive advantages since it has no significant deposits of fossil fuels. However, its continued dependence on imported fuel has made electricity rates in the Philippines among the highest in Asia.

At present, renewables account for just 30 percent of the country’s energy mix. The government-led National Renewable Energy Plan (NREP) aims to triple RE capacity to 15,304 megawatts (MW) by 2030. It is believed the country can further develop 1,200 MW of geothermal; 2,308 MW of sustainable hydro; 235 MW of biomass; and 7,404 MW of wind-generation capacity even before 2030.

As one of the RE players, MGE has developed technologies to convert bana grass, a variety of grass it patented that can be converted to fuel. It is found to be superior to fossil fuel-based coal and can be mixed with coal for power generation.

Currently, MGE can produce over 100,000 tons of bana grass every four months across all its plantations in the Philippines. Of this, 80 percent is exported while only 20 percent is for local consumption.

“That’s why I’m excited for the Philippines because for me, you’re the center. Then, you’ve got all the Asian countries around you. They all need the biomass. Bana grass grows here very well,” Mackay said.

Since bana grass is a multifunctional crop—which apart from being a good source of biomass can also produce other kinds of clean power and  animal feeds—MGE is diversifying its portfolio this year.

The company’s chairman said they are about to commence production of silage for cattle feeds and will start their coal production before the end of 2017.

“So I will be surprised if we don’t match that number [200-percent revenue hike] again this year because now, we can see the real growth in different areas. That’s very unique of us because our business does not only have one product line,” Mackay said.

“We have silage on the line as we already have the biomass. Charcoal is already online since it has just started. And then, we’ll have our green-coal business that will roll out later this year. Then next year, we will be into syngases. That’s what we’ve been through. So bana grass becomes a whole new industry. It’s more than just a biomass,” he said.

A rising number of overseas clients has also shown interest in the company’s technology that utilizes bana grass as a substitute for expensive fossil fuels.

“We are planning to expand internationally and export to other countries for their need of biomass and green coal,” Mackay Green Energy Chief Technology Officer Rex Jamillarin said, adding the requirement for biomass they produce now mostly comes from Korea and Japan.

Jamillarin said both countries executed an environmental agreement and has since made moves to require coal-fired power plants to get RE certificate.

“To achieve that renewable-energy certificate, coal-fired power plants have to mix biomass with coal in a certain ratio so they can get incentives from their government. It helps that it primarily reduces carbon footprints, too,” Jamillarin noted.

Unfortunately, in the Philippines, such initiative is not yet implemented that’s why different groups are lobbying the government to provide incentives to coal-fired power plants that will convert or put a mixture of biomass in their scheme.

With the government’s Philippine Development Plan (PDP) for 2017 until 2022 now being finalized, the state is now challenged to increase the share of RE to 50 percent by 2030.

MGE received inquiries from Malaysia, India and Africa, which is timely since the company continuously develops and perfects the technologies to use on the bana grass.

Jamillarin said they are partnering with manufacturers already and urging more investors to invest in bana grass and in the development of facilities for power and thermal generation.

Bullish on its growth prospects in the near future, the RE company is constantly expanding its bana grass plantations in the Caraga region to include Butuan, Agusan del Norte, Agusan del Sur, Misamis Oriental and Claveria.

It also met investors from Negros which, Jamillarin said, have already ordered 20 million tons of biomass for Korea and agreed to collaborate with them to expand plantations in the Caraga region since it’s near the Export Processing Zone in Taguluan, Misamis Oriental.

“Bana grass will be processed in Butuan and Misamis Oriental and will be exported from there. Locally, there are power-plant developers planning to use bana grass on some electric cooperatives in Southern Leyte, Samar and Mindoro,” he said.

Alongside this development, MGE is also set to expand its Zambonga plantation that could provide more jobs for the locals. From its current 200 hectares in Zamboanga with 30 people per acre, the company is looking at planting bana grass in thousands of hectares.

“Our licensees have employed rebels who opted to farm and leave their guns to till the soil instead. We are also helping reformed drug addicts by providing them work. With the recent closure of mining companies, the bana grass plantation can give jobs to those who lost theirs,” Jamillarin said.

This initiative is MGE’s way of supporting the Duterte administration’s peace process and drug-war campaign by providing employment to the underprivileged.

 

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Roderick L. Abad graduated from Pamantasan ng Lungsod ng Maynila, with a degree course in Bachelor of Arts in Mass Communication. He has 12 years of journalism experience, starting as a Special Features Writer in a major daily newspaper. In 2006, he moved to the BusinessMirror in the same capacity and, eventually, became a beat reporter. To his credit, he was a finalist in the 2011 Holcim Journalism Awards for Sustainable Construction and the 2013 Lasallian Scholarum Awards. He remains affiliated with the BusinessMirror as a contributor.