U.S. company Tampa Energy and partners are looking to invest roughly $50 million in a new ethanol dehydration plant to be based in the Dominican Republic and to supply the U.S. market, the company’s chief executive officer Arthur McDonnell told Dow Jones.

 
“The plant should start operating in the 2008-09 harvest, perhaps June,” McDonnell said.

 
In the first two years, the plant’s processing capacity is expected to be roughly 50 million gallons (190 million liters) per year, with plans after that to perhaps double capacity, he added. Ethanol exported to the U.S. via Caribbean and Central American countries currently enjoy a tariff-free quota of up to 7% of the U.S. market, under a trade agreement known as the Caribbean Basin Initiative (CBI).  Once that quota is exceeded, companies have to pay a hefty 54-cent-per-gallon U.S. ethanol tariff if the ethanol uses imported feedstock.

 
Companies currently exporting ethanol tariff-free to the U.S. via the CBI include U.S. multinational Cargill Inc., London-based trading company ED&F Man, and leading Brazil ethanol exporter Coimex.  Companies such as Coimex, however, point out that they are already looking at investing in local feedstock production in the region, since ethanol sourced from local feedstock have no quota set for tariff-free sales to the U.S.

 
Tampa Energy and its partners are also looking to build a 130,000 metric ton plant in the Caribbean that will produce gasoline additive ETBE, or ethyl tertiary butyl ether, which uses ethanol as a feedstock.