Brazilian ethanol plants to get $260m loan

[XemaSab]

Latin America’s biggest development institution is prepared to defy growing environmental concern about biofuels by lending money to a $1bn-plus Brazilian ethanol project.

The board of the Inter-American Development Bank is set on Wednesday to approve proposals to provide a 15-year loan of $260m (€164m, £130m) to three new ethanol plants being built by Santa Elisa Vale do Rosario, a Brazilian company, and US private equity groups.

The facility – which will sit alongside a $360m commercial bank credit – would be the biggest ever by a multilateral institution for a green fuel initiative. But it may not be popular among the IADB’s European minority shareholders. “It is a hard project for the IADB,” said Sylvia Larrea, the executive managing the project at the bank. “There are heated debates in the market.”

Steady rises in the international oil price have spurred interest in green fuels such as ethanol and biodiesel, but initiatives have become increasingly controversial in recent months as a result of steep rises in the prices of grains and other basic foods.

http://www.ft.com/cms/s/0/2f6fd598-5811-11dd-b02f-000077b07658.html