An Iranian firm has signed a deal with the Republic of Bosnia and Herzegovina to construct an ethanol fuel plant in the southern European state.

Under the contract the Iranian firm, which has not yet been named, will set up the plant to produce the fuel on the banks of the Sava River within the next five years.

The plant is to cover an area as large as 4,400 hectares and will manufacture 100 million gallons of ethanol per year from switchgrass once it's fully operational.

The Iranian firm is committed to clearing mines from 2,400 hectares of the land within the next three years. They were laid during the Bosnian war between 1992 and 1995.

In the fourth year, the company will start harvesting switchgrass, and will begin producing ethanol in the fifth year when it will hit the markets.

The entire project on the site, which the Iranian firm has owned for 50 years, is estimated as worth $150 million.

The project is of paramount importance for the whole of Europe, given that ethanol should meet 10 percent of fuel requirements in the continent by 2015, according to EU rules.

For this reason the Iranian company has been exempted from taxes and has also been insured.

The Iranian company's subsidiaries in Canada, the UAE, and Britain will finance the project and carry out the engineering involved.

The company will also carry out related agricultural and environmental activities.

The required machinery, especially what is needed for agricultural activity, is to be supplied from Iran.

Switchgrass is a hardy perennial which can grow up to 1.8 to 2.2 meters in height. It uses C4 carbon fixation so it has the ability to survive droughts and high temperatures.

It is often considered a suitable candidate for biofuel production, especially ethanol, due to its hardiness against poor soil and climate conditions, its rapid growth and low fertilization and herbicide requirements.


FK/PC/AVA