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July 24, 2007
Be warry of your biofuel supplier
Look what could happen if you choose the wrong one who is not a credit worthy co-party.
Shares plunge in Renewable Power and Light
FO Licht's World Ethanol & Biofuels ReportTuesday July 17 2007
Shares in Renewable Power and Light Plc have lost more than half their value because it expects to make a loss in 2007 instead of a $25 mln pre-tax profit predicted by the house broker, the firm said on July 13. The company blamed the turnaround on the loss of its supply of palm oil which it planned to use to generate electricity in two power plants it is converting to run on biodiesel.
Renewable Power is suing its supplier, Safari Group Inc, in the United States for breach of contract for failing to deliver the palm oil for an earlier agreed price. Its oil palms are grown in West Africa. Palm oil prices doubled since the start of 2006, before recently falling back. They are still up over 70% for the period, driven by demand for biofuel. Renewable Power now faces difficulty buying palm oil at a price to make its operations profitable unless it can secure the supply from Safari at the agreed tariff.
It has obtained a temporary restraining order preventing Safari from transferring the palm oil to anyone else. Renewable Power is considering its strategy, including using other feedstock crops, buying feedstock firms, or growing its own palm oil, while it sues Safari, a spokesman said on Friday.
Posted by Martin at July 24, 2007 10:14 PM
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