This study envisages the basic technical and economic-financial model for the implementation of a fuel ethanol distillery plant in Skeldon, Guyana at the Guyana Sugar Corporation's (Guysuco) new Skeldon industrial site.

Under optimal conditions, the plant will be able to produce, a maximum  of about 35,000 cubic meters (m³) of ethanol per year or 7.7 million  imperial gallons per year. The plant will produce about 23,400 m³ during the first operational year, according to the available feedstock.

The Economic Commission for Latin America and the Caribbean (ECLAC) developed a general study on ethanol production based on the fermentation and distillation of sugar cane molasses. The molasses for the project will be obtained from the sugar process at Guysuco.

The ECLAC study proposes a mixture of up to 10% ethanol in the imported mogas volume, which in 2007 reached approximately 124,000 m³. This mogas volume indicates, at a 10% blending level, a demand of 13,000 m³ of anhydrous ethanol in the first year of operation.

The Guyanese economy is growing and therefore an estimated 2.5% per year growth was added to the mogas volumes to be imported during the tenor period.

The ECLAC study was not able to foresee or assess a decision recently made by Guysuco management related to the project's basic construction plans. Guysuco determined that the Skeldon plant will not be able to supply the distillery's utilities needs, requiring the distillery to install its own equipment, which substantially increases the overall investment costs. On the operation side, there will also be a negative impact on costs because the main utility, the required process steam, will be generated by wood and/or rice waste combustion.

Another fact is the need to process the distillery's main effluent, namely vinasse, which cannot be disposed of in the existing water canals, because of its negative environmental impact. This issue was technically solved by the use of an appropriate technology, which obtains a concentrated vinasse with a solid content level that can be used as a partial feedstock for a fertilizer preparation to be applied at the sugar cane fields.

The necessary vinasse concentration equipment will also increase the investment cost. The final costs will have to take these additional expenses into account, as well as the costs for the various buildings, such as the laboratory, the water treatment station, biomass fuel storage and handling systems, and other such structures.

After considering this unforeseen situation, a new strategy was designed. The simulation had to look for an economy-scale project engineering design that could process all the available molasses, some 90,000 tons per year according to Guysuco. This can be processed by a 120,000 litres per day distillery, producing 23,400 m³ per year of anhydrous ethanol, during 205 operation days.

This production corresponds to an ethanol mixture level of up to 17%, which is feasible in electronic fuel injection engines in existing car models. Flex fuel cars are expected to become more common in the near future, and this will increase ethanol demand.

The countries that have started using ethanol as fuel have adopted a low blending grade, of 5% to 10%, because they have huge or much higher mogas consumption than Guyana. It would require a huge amount of ethanol to reach a 20% grade, for instance, at the beginning of the initiative in those countries. Brazil has an E-23/25 mogas grade currently, but it began blending in 1975.

Guyana has preferential trading arrangements, and is part of the CTP-Caribbean Trading Partnership and Carican-Canada, which will allow it to access favorable market conditions if it needs to export surplus ethanol during the first few years of the project.

Capital expenditures are estimated at US$ 18 million, which with the higher project production cost and with the adopted ethanol sales price conditions does not make the enterprise feasible. The capital expenditures could be adjusted to approximately US$ 12 million if the vinasse concentration plant were not necessary.

The ethanol initiative is valid under Guyana's macro-economic scenario, which can support and create mechanisms that will aggregate value to the ethanol sales price via the elimination of import duties and consumption taxes, in addition to other incentives that may eventually be available to make the project viable.

From the macroeconomic perspective, the replacement of about 23,400 m³ per year of imported mogas by the ethanol project means a hard currency savings of G$ 16.85 billion or US$ 83 million on the energy import bill , during the ten years of the project analysis.

The oil market price was considered to be between US$ 60 and US$ 80 per barrel.