It's 'full steam ahead' for green fuel plant

FUNDING for Grimsby's first bioethanol plant has moved a stage closer with a partnership formed to raise the required £236-million.

Vireol, the company that brought the South Bank scheme forward, has joined forces with investment company Future Capital Partners and construction firm Simon Carves, with summer 2010 a possibility for work starting.

Bank lending and equity will be combined to meet the financial requirements and with agreements now in place to sell the bioethanol – a wheat-based fuel, key to driving down emissions from road transport – the funding element is at an advanced stage.

More than 50 permanent jobs will be created, with hundreds of roles in the construction period, when the 10-hectare site is realised between Bluestar Fibres and Lenzing, off Moody Lane.

The deal created waves in the financial sector yesterday, with international coverage of the partnership formulation.

Ged Russell, technical and operations director at Vireol, said: "This is very positive news. We have been working in the background for some time to secure finance for the project and this is an important step in this process.

"We have been working with Future Capital for two years and have got to the point where we see how we get through the major fundraising work.

"The thing that has triggered this is the agreement for the ethanol out take – reported to be a £1-billion deal. With that sort of scale of project behind us we are confident we will be able to raise the required amount of finance. It will carry considerable weight in the market for raising finance."

The partnership will see the plant leased to operator Vireol, with Future Capital planning to then sell or float the stake further down the line.

The Government has set targets for the amount of renewable fuel filling the tanks of UK vehicles. Bioethanol is seen as the way forward as it can be blended with traditional fuel.

Grimsby's location, with access to deep-water ports, three of the biggest refineries and the most intense wheat-growing area in Britain, made it ideal for such a development.

Mr Russell said: "It is all hands on deck now, full steam ahead. We are putting the final touches to the paperwork for finance, getting everything ready, so when we close on the finance we are ready."

Asked how optimistic he was about securing the full funding – with targets of 40 per cent investor equity – Mr Russell said: "We sense the banks are in a position where they are now considering lending money again. We have been working behind the scenes with them and a number of advisors think now is the time when we should be able to close the deal. We have still got to close the deal, but banks out there are ready, willing and able to help us."

Planning permission for the 150,000 tonne capacity plant was granted in July 2008, and ground investigative work has been completed on site, so the build can begin once the funding is confirmed.