National Biomass Ethanol Program: Agriculture and Agri-Food Canada

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National Biomass Ethanol Program

Summary

The objective of the National Biomass Ethanol Program (NBEP), which is an AAFC-funded $140 million program, is to encourage firms to invest in the Canadian ethanol industry and encourage the production and use of renewable fuels where it is environmentally sound and economically viable. The National Biomass Ethanol Program (NBEP) is being administered by Farm Credit Canada (FCC) on behalf of Agriculture and Agri-Food Canada (AAFC).

Program Description

The NBEP is designed to minimize the cash flow impact of a future federal government decision to reduce or eliminate the 10.0 cent/litre excise tax exemption on fuel ethanol produced for sale and use in Canada. Under the NBEP, participating ethanol producers will be able to draw upon a contingent line of credit established by FCC if reduction or elimination of the federal excise tax exemption on fuel ethanol impairs their ability to meet scheduled long-term debt servicing commitments. The permitted draw period may extend for a period of up to ten years following a reduction in the excise tax differential.

Up to $135 million is directly available to firms planning to build or expand a biomass fuel ethanol plant in Canada and use biomass materials as feedstock. Biomass feedstock may include feedstock from agriculture, forestry or municipal waste streams or a combination of these. FCC will accept applications under the program until March 31, 2006. Upon acceptance, FCC will negotiate a Contingent Line of Credit Agreement with each applicant. The maximum line of credit per applicant is established by multiplying the "eligible" new or expanded plant capacity in litres of annual output by 20.8 cents/litre. In order to draw on their line of credit, participating producers must establish to FCC's satisfaction that elimination of the excise tax exemption has impaired their ability to meet scheduled long-term debt payments. The maximum annual draw is limited to the lesser of 60% of the reduction in the federal excise tax exemption for fuel ethanol times annual plant capacity in litres and the amount needed to meet scheduled long-term debt payments. FCC will advance directly to the recipient's senior debt holders.

Eligibility Criteria:

http://fcc-sca.ca/en/Products/Partnerships/eligibility_e.asp?main=2&sub1=partnerships&sub2=nbep&sub3=eligibility

CONTACT INFORMATION

For further information and eligibility criteria, please contact:
Farm Credit Canada
http://fcc-sca.ca/en/products/partnerships/nbep_e.asp

Michel Beauchamp
400 Cormier Street Suite 5
Drummondville QC J2C 7L9
Tel: (819) 478-2561
Email: michel.beauchamp@fcc-fac.ca