THE boss of a struggling North-East biofuels company has spoken about the industry's fight against rising costs and tough competition from the US.

Sean Sutcliffe, chief executive of Biofuels Corporation, told The Northern Echo of the ongoing struggle against the rising costs of vegetable oils, which are key to the production of biodiesel.

Increasing demand for food and competition from US alternative fuel producers, who receive large government handouts, are also to blame for Billingham-based Biofuel's debts of £100m. Biofuels manufacturers in the US currently benefit from a government subsidy of about 25 per cent.

Mr Sutcliffe said countervailing measures need to be put in place to cancel out the "unfair" competitive advantage that US producers enjoy.

"It means they (US producers)can undercut us by about 13 per cent," said Mr Sutcliffe.

"We, and the entire industry in Europe, have been pushing Brussels to look at what can be done about this unfair subsidy."

Biofuels Corporation, which uses rapeseed, soya and palm oils to produce its fuel, has been battling to survive against the backcloth of a weaker market and rising debts. Its bank, Barclays, has continued to support the company and recently made additional funds available until the end of the year, including £7m for working capital and fixed capital purposes.

Biofuels floated on the Alternative Investment Market in June 2004 and construction of its biodiesel plant at Seal Sands began the following month.

By March 2005, its share price had reached a high of £3.02, valuing the firm at almost £150m. But the price began to fall through the summer as construction delays and rising costs took their toll.

Eight months later, Biofuels was forced to suspend trading when it entered into crisis talks with Barclays.

The bank agreed to back Biofuels with £92m, which allowed production to begin in March last year, but it failed to find its feet in a difficult market.

Production at the plant has been running at only 25 per cent capacity since January.

Last night, Biofuels' share price closed up 0.50p at 11.25p.