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Renova Energy evaluates ethanol plans
4th April, 2008
Ethanol production, distribution and marketing company Renova Energy is evaluating ethanol plans following the suspended construction of its 21 million gallon a year ethanol production facility at Heyburn, Idaho due to cost overruns in December 2007.
On 8 February 2008, the company entered into a Standstill Agreement with its banks under which the banks agreed not to exercise their rights relating to certain breaches of banking covenants by the company that resulted from the suspension of the Heyburn project.
The engineering consultants engaged by the company to re-plan and re-evaluate the costs of the Heyburn project have completed this exercise and, taking into account remobilisation costs and other incremental costs arising from the suspension of the project, the total project cost is now estimated to be $60.1 million (€38 million), comprising $45.2 million for the ethanol plant and $14.9 million for a power plant.
At the time of suspension the project was approximately 75% complete based upon the value of work completed.
The company's efforts to raise additional funding to complete the project have been affected by the conditions in the global credit and equity markets and high raw material costs that are impacting on the biofuel industry as a whole, but the company continues to investigate alternative funding sources to complete the Heyburn project.
The company's marketing and distribution business has sales for the year ended 31 March 2008 estimated at 14.5 million gallons a year, compared to 10.5 million the year before.
The production optimisation project at Renova's facility in Torrington, Wyoming, to increase production capability from approximately 7 million gallons a year to in excess of 10 million is nearing completion with the final phase scheduled for mid-April 2008. Production rates and alcohol yields are already showing significant step-improvements with current production equivalent to approximately 9 million gallons a year.
