Sep. 6--THE Philippine unit of Hong Kong listed First Pacific Co. Ltd. has decided to shelve its planned venture into biofuels.

In a disclosure to the Philippine Stock Exchange, Metro Pacific Investments Corp. (MPIC) said it has canceled its partnership with Basic Energy Corp. (BEC) and Basic Biofuels Corp (BBC) for a multi-billion-peso construction of two integrated multiple feedstock ethanol plants in Mindanao.

MPIC said that it would discontinue the consideration of a possible investment or participation in the bio-fuels project of BEC and BBC after evaluating the same.

"Thus, in accordance with Section X of the MOU [Memorandum of Understanding], MPIC has served a formal notice terminating the said MOU," the company stated.

MPIC earlier signed a memorandum of understanding with BEC and BBC "to assess the viability of establishing a joint venture company" that would engage in the production of ethanol and other alternative fuels.

BEC earlier said that the processing plants are capable of producing around 80 million liters of ethanol per year.

Jose Reyes, BEC executive vice-president and treasurer, had said that the company and MPIC were supposed to shell out at least P3 billion for the construction of the ethanol plants.

MPIC's technical, legal and financial consultants had conducted a 45-day due diligence on the said projects in Zamboanga del Norte and South Bukidnon.

"If the due diligence results are positive, the parties will then pursue a basic framework for collaboration, cooperation and coordination in the establishment of the joint venture," MPIC had said.

Reyes said P4 billion of the P6 billion required would have been raised through borrowings, and the remainder through an offering of additional shares and a private placement.

"Basic's enlarged capital structure is expected to facilitate the entry of strategic investors, certain foreign investors and a planned follow-on offering, hopefully, before the year ends," the BEC official had said.

Apart from its biofuels foray, BEC is also venturing into other energy sectors. It earlier signed a geothermal service contract with the Department of Energy for an exploration and development project covering the Calumpan Peninsula in Mabini, Batangas. The company said it would undertake exploratory activities and well drilling to determine the viability of a geothermal resource in the area for power generation.

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