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Brazil's Innovation body,FINEP, and National Development Bank,BNDES, set up investment partnership of $540 million to fund biofuel developments


The Brazilian Innovation Body, FINEP, and the country’s National Development Bank, BNDES, agreed on a new investment partnership meant to promote ethanol development in the country. The two agencies which are long time primary support sources for innovation in the country; FINEP and BNDES established a blueprint that will offer sums of about US$540 million in funding for the country’s biofuels industry.

 

According to reports, this marks the first step towards the development of an industrial complex in the country, molded on the same idea as that of the country’s petrochemicals industry. The investment project, intended to enhance innovation in the ethanol industry, will commence officially on the 30th of July, this year. The overall target of this investment is to invest in technology projects spanning the next three to four years with the aim of increasing the use of sugarcane bagasse and straw for the production of ethanol and new products like polymers, special oils and biodiesel.

 

The second generation ethanol is aimed at doubling the Brazil’s ethanol production capacity, minus having to increase the area required for sugarcane plantation. The second generation ethanol is also known as cellulosic ethanol, a biofuel that is produced from sugarcane bagasse and straw and has the capacity of being of a major breakthrough in the sugar and ethanol industry in the coming five years.

 

This project for second generation ethanol will be funded by BNDES. The technology for the manufacture of second generation ethanol is currently under “analysis for economic viability” globally, but is more proclaimed in the US. As the biggest producer of cane globally, Brazil is a contender in the development of second generation ethanol and experts believe that the country’s prospects of becoming a major player in this new market is possible.

 

BNDES’ funding for acquisitions of machinery and equipment topped record levels in the first quarter of 2010, both in the number of disbursed amounts and operations. This marked a growth of disbursements of 34% to R$35.7 billion in the first quarter this year. Within 2010, R$ 15.6 billion has been released in credit for the acquisition of capital goods, up 133% when compared to the same months in 2009 at, R$ 6.7 billion.

 

BNDES Finance contributes 44% of the bank’s total disbursement that, between January and April this year totaled R$35.7 billion, up 34% from the same period last year. BNDES, a state agency, finances various industrial as well business investments projects in Brazil.

 

June 7, 2010.