GOVERNMENT HAS PLANS of setting up an ethanol plant which requires $195 million in investment.

Prime Minister Owen Arthur told the chamber that several countries throughout the world have been moving towards the use of ethanol blended in gasoline and diesel.

He said ethanol could be blended in gasoline at up to ten per cent without any negative impact to the functioning of modern gasoline vehicles.

"An "ethanol for vehicle fuel" study has just been carried out as part of a sugar cane energy study. The study suggests that an investment of US$10 million in an ethanol plant in Barbados would produce 60 000 litres of ethanol per day. Our immediate target is to meet ten per cent of current annual gasoline consumption of 14 million litres per year," said Arthur.

He suggested that until domestic production came on stream, from April 2006 this country would import 14 million litres of semi-processed raw materials from Brazil, and under an arrangement with a company in Trinidad and Tobago, it would be processed into ethanol to be blended with the gasoline to be brought into Barbados.

Arthur said given the present import cost of gasoline, the 14 million litres of ethanol would result in a fuel saving in excess of $25 million.

However, the annual returns would be $65 million in energy savings.

Government is also trying to enhance Barbados' own fuel production to 1 500 barrels per day from a 1 000 per day, which would translate to a saving of $10 million per year.

Arthur also expressed a hope that the $96 million in savings which the Barbados Light & Power would realise from having the fuel pumped directly would be passed on to consumers.

The Prime Minister looked at several other savings measures to help reduce Barbados' fuel bill, including encouraging motorists to help to reduce the $200 million spent on transport fuel annually by giving special concessions from April 1 on vehicles that use energy sources which are less costly than traditional or locally available fuels.

"Hybrid vehicles, as well as those powered by solar energy, LPG and compressed natural gas will attract an excise tax at a fixed rate of 20 per cent as compared to the lowest rate of 46.9 per cent on regular motor cars."

It is not only the ordinary man whom the Prime Minister wants to make more energy conscious but the public transport system as well.

"The management of the Transport Board has been mandated to undertake a technical and feasibility study of using alternative fuels to power its own fleet," he said.

The energy conservation policies also extended to the tourism sector with an aim of making it more energy efficient.

Arthur said there were hotels abroad where the light only came on with the activation of a card in a slot and Barbados' hotels did not have this facility.

Government is also proposing the establishment of an Energy Efficient Audit and Retrofit fund of $10 million to be established as a revolving loan fund.

"To enable it to purchase energy efficient devices and equipment including solar systems. It is proposed, Mr Speaker, that such a fund should be managed by the Enterprise Growth Fund," he said. (WB)