AP Corporate Finance produced project for Bio Diesel in Uganda.

1. BIODIESEL IN UGANDA
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2. AP Corporate Finance LLP (“APCF”) has been engaged by NEWCO to act as lead corporate finance advisor and as such has produced
this information memorandum.
APCF is managing the fundraising process on behalf of NEWCO, and as such can be contacted by an interested party with regards to
this business venture.
Further information on APCF is available as follows:
Web: www.apcorporatefinance.co.uk
Email: enquire@apcorporatefinance.co.uk
Tel: +44 (0) 7791 224 126
AP CORPORATE FINANCE
AP Corporate Finance LLP is a Limited Liability Partnership Registered in England & Wales
Company Number: OC352537  Registered Address: 21 Lapstone Gardens, Harrow, Middlesex, HA3 0EB
2

3. CONTENTS
EXECUTIVE SUMMARY PAGE 4
PROPOSITION PAGE 10
JATROPHA CURCAS PAGE 15
BIODIESEL PAGE 31
UGANDA PAGE 38
NEWCO PAGE 42
FINANCING PAGE 47
FORECASTED FINANCIALS PAGE 52
NEXT STEPS PAGE 61
CONTACT US PAGE 63
3

4. EXECUTIVE SUMMARY
 PROPOSITION  MANAGEMENT TEAM
 JATROPHA CURCAS  FINANCING
 BIODIESEL MARKET  FORECASTED FINANCIALS
 UGANDA ENERGY SITUATION  NEXT STEPS
4

5. EXECUTIVE SUMMARY
Proposition Benefits of Jatropha Curcas
We propose to secure a 5,000 hectare plot of land (suitable Jatropha has been heralded as an important discovery with
for a biodiesel plant) in Uganda, on which an industrial scale regards to addressing the planet’s future energy
biodiesel feedstock farm, harvesting, processing and refining requirements, and specifically to the development of bio-
plant will be built. fuels. The primary benefits Jatropha has is that it is inedible,
suited to semi-arid soils and has a high oil content.
The feedstock to be grown and cultivated is a plant that has
only recently been discovered as a viable and cost effective
source of biodiesel; a crop named Jatropha Curcas. It does not compete with food crops and so does not fuel
food shortages, and can be harvested, processed and refined
A plant of this nature will be capable of producing close to 5 at a fraction of the cost of traditional biodiesel feedstocks
million litres of pure biodiesel per annum (equivalent to (i.e. Rapeseed, Soybean, Corn, Sugar Cane, etc).
26,000 barrels per annum). The intention is to sell this entire
quantum directly to the Ugandan government via an off-take Jatropha Market
agreement to assist it’s annual energy requirements. The global market for this feedstock is in its infancy, but the
large oil companies are currently investing heavily into
We propose to structure this as a joint venture with the research and development. The market was estimated to be
Ugandan government; Uganda will provide the project with 900,000 hectares worth of plantations globally in 2008, but
a suitable 5,000 hectare plot of land (freehold transferred to market experts estimate this to grow to 5 million hectares
the joint venture) as its equity contribution and will receive a by the end of 2010, and then an annual growth of 1-2 million
stake in the venture in return. In addition, a private equity
hectares in the short term. Most of the current plantations
sponsor is sought to supplement NEWCO’s (likely to be
called “Biofuel MAP”) capital and will receive an appropriate are based in Asia (80%), despite Africa having the ideal
stake in return. NEWCO has also sourced a top tier energy climatic conditions to cultivate Jatropha.
consulting firm who are keen to join the project, either by
way of partnership or as primary consultants. Some researchers state that if only 3% of the land in Africa
that is considered viable was used to grow Jatropha, some
Uganda has been identified as an ideal partner, both 119 million tons of crude oil and 8.4 tons of glycerine could
financially and geo-climatically. There are substantial be produced per annum, translating to annual revenues of
benefits for the Ugandan government and its citizens. $55 billion.
5

6. EXECUTIVE SUMMARY
Biodiesel Market Uganda Energy Situation
The Biodiesel market has experienced an enormous upturn in A growing economy combined with a fast growing population
recent years. Demand is underpinned by the need to increase means a growing energy demand. Uganda’s energy supply and
domestic energy security, reduce greenhouse gas emissions from utilization is dominated by biomass. Access to electricity in Uganda
the transport sector and help address an expected shortage of is limited to 9% of the population, the remaining 91% of the
diesel refining capacity. population mainly use biomass in the form of firewood or charcoal
for their energy needs. The country’s energy is derived 93% by
It is possible that biodiesel could represent as much as 20% of all biomass, 6% fossil fuels (all imported) and 1% hydro-power.
on-road diesel used in Brazil, Europe, China and India by 2020.
They each have targets to replace 5% to 20% of total diesel with The transport sector in Uganda is totally dependent on imported
biodiesel by 2020. fossil fuels whose prices had hit all time highs recently. The fuel
bill for a country like Uganda constitutes almost 50% of the
The US and European farming systems can’t produce the budget. The escalating prices of fossil fuels have made it
necessary quantities without creating a considerable risk to the imperative for government to promote the development and
food chain. It is therefore expected that the bio-fuel revolution utilization of renewable energy resources including bio-energy and
will specifically benefit developing countries that can produce bio- their associated technologies.
fuel for their own consumption as well as for export.
Uganda’s national energy policy promotes accelerated power
Although the biodiesel market is growing at a rapid rate, there is a generation from renewable resources and emphasizes the
major threat to the sustainability of growth; the price of development/adoption and utilization of other modern fuels and
traditional biodiesel feedstocks is increasing steeply, hence technologies. In implementing the policy, the government expects
jeopardising the profitability of the industry. The reason for the to address poverty issues, catalyse industrialization and protect
rising price of traditional feedstocks is the current food crop the environment.
shortages the world is experiencing combined with the fact that
most traditional feedstocks for biodiesel compete with food crops. The renewable energy policy recommends blending of diesel with
20% biodiesel. By specifying the maximum proportion of biodiesel
It is widely agreed that the solution is to source a new generation blends the government hopes that investors will be attracted to
of feedstocks that are low in cost, relatively easy to cultivate, and invest in biodiesel production knowing that there is a market for
most importantly do not compete with food production. One of it. The biodiesel will be used for the transport sector and also for
the most promising of such feedstocks is Jatropha Oil. rural electrification and farm power production.
6

7. EXECUTIVE SUMMARY
Management Team – Managing Director Management Team – Development Director
The Managing Director of NEWCO is Mukesh Patel. He is a Amit Patel spent a number of years working in
serial entrepreneur and has over the past 30 years the Investment Banking and Private Equity community in
successfully set up and run a number of businesses in a wide London where he built extensive experience in the following
range of disciplines, amassing a portfolio worth millions of disciplines; Leveraged Finance, Interest Rate Derivatives,
pounds. Securitisation and Private Equity, working for a major
European bank.
Mukesh’s key skill is spotting commercial opportunities early
in their lifecycle, assembling the best team to penetrate the Amit has worked on an array of transactions including high
industry and investing into enterprises that successfully profile public-to-privates, joint ventures, fund creations,
participate and profit in these opportunities. financial markets arbitrage opportunities and other multi-
billion pound buyouts.
He has in the past set up; an import/export operation in the
transport sector which turned over £3 million per annum, After leaving the City in 2008, Amit set up a lead corporate
and a fashion business which designed and distributed three finance advisory boutique, “AP Corporate Finance LLP”,
labels, turning over in excess of £4 million per annum. advising a range of corporations on mergers, acquisitions,
Mukesh also owns a property investment firm which has a disposals and capital raising. Amit’s firm has worked with
portfolio of UK real estate worth £10 million. Mukesh Patel on a number of transactions in the past on an
advisory and joint venture basis.
Today, Mukesh is well known in the business community
and his network of contacts and advisers in real estate, Amit brings to NEWCO a wealth of business development,
industry and retail markets provides him a great number of financing and structuring experience, and his firm is acting as
introductions to excellent business opportunities. lead corporate finance advisor to NEWCO. His role as
Development Director at NEWCO will continue throughout
the life of the project, and he will oversee all new business
His role as Managing Director of NEWCO will make him development opportunities alongside monitoring the
responsible for overall strategy, business origination, project’s performance over its life.
negotiation and oversight of the entire project.
7

8. EXECUTIVE SUMMARY
Financing Forecasted Financials
Funding for NEWCO will be finalised upon agreement of BASIS
heads of terms. The management team have identified  Management have engaged a top tier renewable energy
consultancy firm to create a site schematic and financial model
several options available to pursue, all of which are sourced for this project.
in the region. Early stage discussions have been opened with  The financial model is based on their extensive experience with
a small group of private equity firms, who have displayed a biodiesel plants and so deemed highly accurate (and also
keen appetite to join the project as a partner. prudent).
RETURNS
The funding is likely to be a combination of the following
 Two scenarios have been modelled; a trade sale in Year 5 and
instruments: continued involvement in the project for 10 years.
 A Year 5 trade sale generates net proceeds of $16.4 million and
 Equity an equity IRR of over 95%.
 NEWCO’s own capital  Continuing the project for 10 years results in a net cash inflow
of over $11 million and a cash IRR of 50%.
 Private equity fund focused on the African
energy market CAPITAL EXPENDITURE
 Debt  The project incurs a total capital cost of $9 million (over 5
 Asset Financing years), and the model assumes this is funded 30:70 Equity :
Debt.
 Import/Export Financing
 Structured Finance PROFIT & LOSS
 Upon plant maturity (Year 5), turnover is $5 million per annum
and EBITDA of $3.4 million is generated annually.
 Carbon Credit Financing
 Kyoto Protocol’s Clean Development Mechanism
CASH FLOW
 Carbon Credit Trade Finance Program  Cash generative from Year 4 and produces a net cash inflow of
over $3 million per annum from Year 5 onwards.
 Grants  The project accumulates over $11 million net cash inflow over
10 years (after debt is repaid in full).
8

9. EXECUTIVE SUMMARY
Next Steps
Q2 2010
 Sign heads of terms with the Ugandan government .
 Commence discussions with debt and equity providers.
Q3 2010
 Secure bank debt and committed capital from a private equity
partner.
 Sign primary energy consultants as partner or long-term
advisor.
 Ugandan government proposes a series of suitable sites to
management. Energy consultant assists in optimal site
selection.
Q4 2010
 Upon site finalisation, all feasibility studies will commence.
Q1 2011
 Engineering, agronomic and infrastructure schematic
production.
 Plant design and procurement finalised.
 Permits secured.
2011 ONWARDS
 Site clearance.
 Infrastructure laid.
 Jatropha planted.
9

10. PROPOSITION
 OUTLINE PROPOSITION
 PROPOSED DEAL STRUCTURE
 UGANDA BENEFITS
 KEY BUSINESS STAGES
10

11. PROPOSITION: OUTLINE
Outline Proposition
We propose to secure a 5,000 hectare plot of land (suitable for a biodiesel plant), on which an industrial scale biodiesel
feedstock farm, harvesting, processing and refining plant will be built.
The feedstock to be grown and cultivated is a plant that has only recently been discovered as a viable and cost effective source
of biodiesel; a crop named Jatropha Curcas. This feedstock will take five years to cultivate and mature into seed yielding trees;
whilst this cultivation is under way, the plant will not import jatropha seeds from an external supplier as this has been deemed
uneconomic. The plant will have incoming cash flow from Year 3 as the feedstock begins to mature. As soon as the proprietary
jatropha plants yield seeds, this will serve as the refinery’s own supply of feedstock. The plant will also have a proprietary
power generator capable of generating a surplus amount of power.
A plant of this nature will be capable of producing close to 5 million litres of pure biodiesel per annum (equivalent to 26,000
barrels per annum). The intention is to sell this entire quantum directly to the Ugandan government via an off-take agreement
to assist it’s annual energy requirements. Uganda currently imports all of its transport energy requirements (fossil fuels) at a
heavy cost. This plant will provide Uganda a guaranteed source of biodiesel (which can be used in all diesel engines), at a duty-
free and pre-agreed price, and will also improve the country’s current energy security situation.
We propose to structure this as a joint venture with the Ugandan government; Uganda will provide the project with a suitable
5,000 hectare plot of land (freehold transferred to the joint venture) as its equity contribution and will receive a stake in the
venture in return. NEWCO will provide equity capital and manage the entire project (from inception through to day-to-day
operations) and for this will retain a majority stake in the joint venture. At this stage, NEWCO is in discussions with a highly
reputable renewable energy consultant (US based) to partner with NEWCO on this project and in exchange will either receive a
stake in the project or fees. We are also in discussions with a small group of African energy private equity specialists to provide
further capital for a stake in the project.
The following page summarises the proposed deal structure in diagrammatic form.
11

12. PROPOSITION: DEAL STRUCTURE
Proposed Deal Structure
Equity Capital
EQUITY [x]% Management Agreement
Main Operator
PRIVATE EQUITY
PARTNER
BIODIESEL FEES OR EQUITY [x]%
SPECIAL
ENERGY PARTNER
PURPOSE
VEHICLE
Consultancy Agreement
Agronomy, Technology
Procurement
AFRICAN BANK
Freehold Land EQUITY [x]%
Off-Take Agreement
UGANDAN GOVERNMENT
12

13. PROPOSITION: WHY UGANDA?
Why Uganda? Benefits to Uganda
NEWCO has identified the Ugandan Government as an Entering into a partnership in this project has several listed
ideal partner for this venture for the following reasons; benefits for the Ugandan Government and all of its citizens.
 Political stability and a business friendly environment.  A stake in the profits of the project and hence increase
 Ideal geographical location and climatic conditions for the economic health of Uganda.
jatropha cultivation.  Improve the financial health of Ugandan businesses that
 Land availability. currently pay for expensive fossil fuel imports.
 Underdeveloped bio-fuels industry.  Improve local employment opportunities as the majority
 Net energy importer. of the labour will be sourced locally.
 Develop the technology and rapidly increase the number
Map of the Region of plants operating in the country.
 Significant foreign exchange savings by reducing fossil
fuel imports.
 Improve Uganda’s competitive advantage amongst
African peer nations.
 Improve Uganda’s energy security with a guaranteed local
supply of diesel, and lowered reliance on external energy
imports.
 Lower emissions of greenhouse gases and importantly
lower local pollution caused by biomass, hence increasing
the country’s health.
 Most of the oil-bearing crops enrich the soil.
13

14. PROPOSITION: BUSINESS STAGES
Stages required from inception to completion
14

15. JATROPHA CURCAS
 OVERVIEW
 ADVANTAGES v RISKS & CHALLENGES
 PROCESS OF BIODIESEL REFINEMENT
 GLOBAL MARKET
 AFRICAN MARKET
15

16. JATROPHA CURCAS: OVERVIEW
Jatropha Curcas Jatropha Fruit
Jatropha Curcas is a small perennial tree, which is drought
resistant. It grows well in marginal/poor soil, is easy to
establish, grows relatively quickly and lives whilst producing
seeds for 40 years. Normally, it grows between three and
five metres in height, but can attain a height of up to eight
or ten metres under favourable conditions.
Fruits are produced several times a year under irrigation and
high temperatures. The seeds become mature when the
capsule changes from green to yellow, after two to four
months. Early growth is fast and with good rainfall
conditions nursery plants may bear fruits after the first rainy
season, direct sown plants after the second rainy season.
The seeds have an oil content of up to 37%. The annual seed
yield ranges from 0.5 to 12 tons per hectare depending Jatropha Trees Thriving in Arid Conditions
mainly on soils and water regime. Oil can be extracted from
the Jatropha nuts after two to three years. The oil processed
through esterification into biodiesel is increasingly being
used as a fuel by transport and energy companies. The by-
products are pressed cake, which is used as organic fertilizer
and also glycerine, which can be used to make soap.
Jatropha thrives in the drier regions of the tropics with
annual rainfall of 300-1000mm occurring mainly at lower
altitudes (0-500m) in areas with average temperatures well
above 200C. As the plant is drought-resistant and grows on
low nutrient content marginal soils, it is ideal to cultivate on
lands not appropriate for food crops.
16

17. JATROPHA: ADVANTAGES V RISKS & CHALLENGES
Advantages Risks & Challenges
 Jatropha yields a high-quality oil which is well suited for use in
the transport and energy sector. Jatropha is a wild species, not a domesticated industrial crop.
 Jatropha has a high yield potential of more than 1 tonne of oil Yield expectations are uncertain due to inhomogeneous results
per hectare per year. and the lack of improved seed material; research on Jatropha
and plant breeding has just started.
 Jatropha can grow on poor soils that are not suitable for food
production; it is suited for the rehabilitation of waste lands. Jatropha will not produce good yields in poor conditions; there
are trade-offs between rehabilitation of wastelands and
 It grows, among others, in semi-arid regions not suited for oil maximisation of oil production.
palms.
Harvesting is very labour-intensive and should be considered in
 Jatropha requires significantly less water than oil palms the economic viability analysis.
(approx. 1/10).
Pests and diseases are a problem for Jatropha as they are for
 Jatropha seeds do not have to be processed immediately any other crop, particularly in monoculture.
(unlike palm); therefore remote areas can be included in the
production schemes. Jatropha contains toxic substances. So far, no technologies
exist to remove these, and hence the seed cake currently
 Jatropha can be planted as a hedge around fields or on unused cannot be used as fodder for animals. It can however be used
land and offers smallholders an opportunity to create for power generation.
additional revenues.
 All of these challenges will be considered and mitigated upon
 Jatropha is well suited for intercropping, in particular during launching of any sites.
the first years while the trees are small.
 Jatropha oil can be used locally to fuel vehicles, diesel
generators, lamps or cooking stoves without a
transesterification into biodiesel.
17

18. JATROPHA: PROCESS OF BIODIESEL REFINEMENT
Biodiesel Refinement Process & By Products of Jatropha
JATROPHA CURCAS
SEEDS
OIL EXTRACTION UNIT OIL CAKE MANURE
LAMP & ANIMAL
JATROPHA CURCAS OIL DETOXIFICATION
STOVES FEED
ALCOHOL & TRANSESTERIFICATION CRUDE
CATALYST REACTOR GLYCEROL
Processing Challenge
Jatropha oil is hydroscopic, absorbs water
CRUDE BIODIESEL
REFINED and needs nitrogen blanketing on steel tanks.
GLYCEROL Since is Jatropha is high in acid, it has the
tendency to degrade quickly, particularly if
not handled properly. Immediately after
SOAP & expelling, the oil must be kept in storage
WATER WASHING TANK
CANDLE conditions that prevent undue degradation.
Exposure to air and moisture must be
minimized, hence the need for nitrogen
PURE BIODIESEL blanketing on the tanks.
DIESEL ENGINE
18

19. JATROPHA: GLOBAL MARKET
Findings of the Recent GEXSi “Global Market Study on Jatropha”, May 2008 (1)
THE JATROPHA INDUSTRY IS IN A VERY EARLY STAGE OF DEVELOPMENT
Currently, no coherent overview of global activities in Jatropha exists. Very few projects are more than two years old and
hardly any project can demonstrate significant production of Jatropha oil yet.
NEVERTHELESS, APPROXIMATELY 900,000 HECTARES OF JATROPHA HAVE ALREADY BEEN PLANTED
Although the industry is in its early stages, 242 Jatropha projects were identified, totalling approximately 900,000 hectares.
More than 85% of the land cultivated is located in Asia. Africa counts for approximately 120,000 hectares followed by Latin
America with approximately 20,000 hectares.
JATROPHA WILL SEE ENORMOUS GROWTH: 5 MILLION HECTARES ARE EXPECTED BY 2010
The number and size of Jatropha projects currently being developed is increasing sharply. This is the case in almost all regions
of the world which are suitable for Jatropha cultivation. It is predicted that each year for the next 5-7 years approximately 1.5
to 2 million hectares of Jatropha will be planted. This will result in a total of approximately 5 million hectares by 2010 and
approximately 13 million hectares by 2015.
GLOBAL INVESTMENTS OF UP TO 1 BILLION USD EXPECTED EVERY YEAR
Assuming an average investment of 300-500 USD per hectare, the expected growth path of the industry will lead to worldwide
investments totalling 500 million to 1 billion USD every year for the next 5-7 years.
THE JATROPHA INDUSTRY STRUCTURE WILL TRANSFORM DRAMATICALLY
Today, the global Jatropha industry is dominated by government supported programs and a few larger internationally oriented
private players. We are observing a trend of major oil companies and international energy conglomerates entering the field
with plans for large-scale investments.
19

20. JATROPHA: GLOBAL MARKET
Findings of the Recent GEXSi “Global Market Study on Jatropha”, May 2008 (2)
SMALLHOLDER FARMERS PLAY A VITAL ROLE IN MOST JATROPHA PROJECTS
Two thirds of all projects analysed work with local outgrowers, often in combination with a managed plantation. 50% of all
project developers in Latin America and Asia opted for this combined approach. Pure plantation models are most frequent in
Latin America (44%). In Africa, where two thirds of the projects integrate smallholders, pure outgrower models are equally
important as the combined model.
JATROPHA HAS NOT LED TO A REDUCTION IN FOOD PRODUCTION
In the report’s analysis, only 1.2% of areas planted with Jatropha had been used for food production in the 5 years prior to the
start of the project. 70% of all projects analysed practise some form of intercropping. Therefore, Jatropha cultivation supports
food production if formerly unused areas are developed.
JATROPHA HAS NOT CONTRIBUTED TO THE DESTRUCTION OF PRIMARY FOREST
According to the report’s data sample, only 0.3% of any cultivated areas were previously primary forest, and 5% secondary
forests.
POLITICAL SUPPORT FOR JATROPHA IS ALREADY STRONG, AND DEVELOPING FURTHER
So far – especially in Asia – governments have been the main driver for Jatropha cultivation and developed specific Jatropha
programmes. Rising crude oil prices are now creating a strong demand for bio-fuels. Therefore, large oil and energy
conglomerates are beginning to implement large-scale Jatropha projects. In the course of this process, the focus of
government regulation will shift towards more general frameworks for the bio-fuel sector.
PRODUCTION IS FOCUSED ON DOMESTIC MARKETS
Production for local markets is more important than export, especially in Asia. For domestic markets, the use of unrefined
Jatropha oil is seen equally important as the transesterification into biodiesel.
20

21. JATROPHA: GLOBAL MARKET
Scale (hectares) and Number of Jatropha Projects Currently
Source: GEXSi “Global Market Study on Jatropha”, May 2008
21

22. JATROPHA: GLOBAL MARKET
Jatropha Industry Structure
The largest Jatropha projects today are government initiatives that typically work with smallholder farmers in Asia. These
projects prevail especially in India and China.
The biggest private companies in the field regarding planted acreages are:
 D1-BP Fuel Crops (operations predominantly in Asia and Africa)
 Mission Biofuels (Asia)
 Sunbiofuels (Ethiopia, Tanzania, Mozambique)
 GEM Biofuels (Madagascar)
A wave of large scale investments especially from oil majors are expected in the near future. The joint venture company D1-BP
Fuel Crops of BP and D1 Oils in 2007 was the first indication of this trend. Now major oil companies e.g. in China are devising
their market entry.
It is expected that the industry structure will change dramatically in the next few years, with large (multi-)national energy and
oil companies entering the field, driven by climbing crude oil prices and pursuing the quest for larger volumes of alternative
and sustainable feedstock.
This is the perfect time to enter into joint venture agreements with smaller operators. This way, a government can gain
invaluable expertise in this new field prior to oil giants entering the arena, who will dictate poorer terms for partnerships
with governments that have not gained experience of the basics of this lucrative industry.
22

23. JATROPHA: GLOBAL MARKET
Global Market Forecast
An enormous growth is predicted by experts of the Jatropha industry. 1-2 million hectares are expected to be planted annually
in the next few years all over the world.
The clear focus of Jatropha plantations today lies in Asia – more than 80% of identified project areas are situated there. Among
the Asian countries, India plays, with more than 400,000 ha, the largest role, followed by China.
In the other regions, Brazil, Zambia, Tanzania and Madagascar are most important today.
In the future, Asia is expected to prevail with more than 70% of global acreages developed there until 2015.
Africa is heavily underweighted considering the massive amount of viable land available. This situation will not change unless
African Governments and businesses proactively legislate and speculate on the capabilities of the Jatropha Biodiesel potential.
Scale of Jatropha Plantations 2008-2015 (hectares) Distribution of Jatropha Plantations 2008 (hectares)
14,000,000
12,000,000
10,000,000
8,000,000
Asia
Africa
6,000,000
Latin America
4,000,000
2,000,000
-
2008 2010 2015
23

24. JATROPHA: AFRICAN MARKET
Structure of the African Market Jatropha Activity Levels in Africa
Jatropha has been known in many countries in Sub-Saharan
Africa for generations. It has been planted as hedges (to
serve as a “living fence“) or has been used for artisan soap
production or medicinal purposes. Development agencies
supported pilots for decentralized rural energy supply.
Northern Africa
There are very little Jatropha related activities due to the
extreme arid climatic conditions; several pilot projects that
make use of sewage water for a year-round irrigation are
being tested in Egypt.
Western Africa
Mali and the Cape Verde Islands have a long-tradition in
Jatropha cultivation; the focus in Mali lies on the use of pure Southern Africa (including Madagascar)
plant oil for village energy supply. However, large-scale Apart from Botswana, Angola and – due to the prohibition of
projects are currently prepared in several West African commercial Jatropha plantations – South Africa, ambitious
countries, such as Ghana, Nigeria and Cameroon.
commercial operations are currently developing throughout
Southern Africa. The largest acreage under cultivation
East Africa currently exist in Madagascar and Zambia, with each about
The largest project developments have been reported in 35,000 hectares, followed by Mozambique.
Tanzania, followed by Ethiopia. Jatropha related activities
have started at a small scale also in Kenya and Uganda and
are likely to rise dynamically.
24

25. JATROPHA: AFRICAN MARKET
Total Acreage of Selected Countries – Forecast for 2008 - 2015
Observation
Uganda will potentially miss
this opportunity if it does not
accelerate its current resource in
developing plantations.
Source: GEXSi “Global Market Study on Jatropha”, May 2008
25

26. JATROPHA: AFRICAN MARKET
Potential of Jatropha in Africa
Jatropha in Africa Benefits of Jatropha in Africa
In a survey conducted in Cape Town, it was found that over
1,080 million hectares of land in Africa could be termed
prime growing regions of Jatropha Curcas. A further 580
million hectares could be used making a total of 1,660
million hectares suitable for growing the plant.
Safe to
handle &
On the below map of Africa, the dark areas represent prime store
Jatropha growing regions. These areas, comprising over
Local fuel
1,080 million hectares, are ideal because the average annual Reduced
for
wear of
rainfall exceeds 800mm, and the minimum temperature of engine parts
electricity
generation
the coldest month is greater than 20C.
The light areas of the map are
areas with average annual rainfall
in excess of 300mm, with the Benefits
minimum temperature of the
Improved Biogas for
coldest month greater than 20C. emissions heating
These areas, comprising over 580
million hectares, are also viable
regions for growing Jatropha.
Some researchers state that if only 3% of the land in Africa Employment Wasteland
that is considered viable was used to grow Jatropha, some & Income utilization
119 million tons of crude oil and 8.4 tons of glycerine could
be produced per annum, translating to annual revenues of
$55 billion.*
*Source: Dr Guy Midgley, Kirstenbosch Research Centre, Cape Town
26

27. JATROPHA: EAST AFRICAN MARKET
Ethiopian Policies
The Government actively encourages the cultivation of Jatropha. ETHIOPIA
A Bio-fuels Program has been introduced - specifically including
Jatropha - in order to further the independence of the country
from oil imports. It designates marginal land for Jatropha
cultivation. Government officials of the Ministry of Mines and
Energy report that a bio-fuel legislation for blending fuel (benzene
and ethanol) came into force mid 2008.
Foreign direct investment into bio-fuel production is actively
encouraged through furthering land access, enabling bank loans,
through tax incentives as well as through technical assistance for
farmers.
Jatropha cultivation is expected to improve food availability
through bio-oil run irrigation and food-drying schemes as well as
fertilisation with seed cake. Intercropping with food crops is
reportedly mandatory.
Ethiopian Projects
The Government has identified almost 24 million hectares of land suitable for Jatropha and Palm Tree cultivation in the states Oromia,
Benishangul Gumuz, Gambella, Somali, Amhara Southern Nations, Nationalities and Peoples Region (SNNPR) and Tigray and Afar
Regional states.
Oromia has the largest land suitable for bio-fuel development with 17.2 million hectares. The land is, according to the government,
neither used for farming nor for grazing.
Country experts estimate the current land under Jatropha cultivation as 1,700 hectares. This number is very likely to rise significantly as
several foreign investors have applied for or already secured land titles. According to public sources, five Jatropha projects have already
gone operational. Among the major investors are, according to public sources, Sunbiofuels, Global Energy and BioX Group.
27

28. JATROPHA: EAST AFRICAN MARKET
Ugandan Policies
UGANDA
The Government is reported to intend a detailed study on
bio-fuel plantations, production, use as well as down-
streaming issues.
A fuel-legislation exists for a 20% blend of bio-fuels – it is
currently not enforced.
Ugandan Projects
No substantial Jatropha cultivation or bio-fuel production is taking place in Uganda at present, but country experts report potential. Four projects
have been identified – all of them private undertakings.
(1) The company EA Uganda Ltd. set up a test plantation of 1-2 ha in 2007 in the Mukono District and on two further farms in Moyo District (West Nile
Province). If promising yields are achieved, an oil expeller was due be purchased for 2008/09 for test production. Biodiesel production is planned
for 2010/2012 with various expellers in West Nile Province. Jatropha products to be used are plant oil, shells and residue for compost and
methane gas production. Project partners are the Makere University and the GTZ Uganda for developing capacity in oil expelling and use of
residue. Research activities are to be included in the project in the future, focusing on the identification of high yielding plants, fertilisation
requirements, pruning, spacing and intercropping.
(2) According to recent public sources, the private company Royal Van Zanten has set up a 40 ha Jatropha plantation in Mukono District and runs
outgrower schemes with vanilla farmers (intercropping) in the districts of Mukono, Kayunga, Jinja, Iganga, Kamuli and Bugiri.
(3) The National Forestry Research Institute in late 2009 embarked on a project to test the viability of biodiesel from jatropha.
(4) Africa Power Initiative has set up a jatropha processing plant with a reported capacity of 1,000 tons of seeds a day. The plant already owns a 2,000
acre jatropha farm in the Karamojo district but is looking for additional outgrower supplies.
28

29. JATROPHA: EAST AFRICAN MARKET
Kenyan Policies
Jatropha cultivation is not yet directly supported. KENYA
The Government is currently drafting a bio-fuel strategy. A
national Task Force on Jatropha cultivation has been set up
under PIEA´s (Petroleum Institute of East Africa) lead. It
reportedly focuses on the interests of small and large scale
Jatropha growers, will manage the entry of bio-fuels into the
local market and study options in the carbon market (sale of
carbon credits & local certification).
Kenyan Projects
In Kenya, small-scale cultivation of Jatropha (<5 ha) and pilot plantations play the most important role today. Country experts
expect a significant growth of medium-scale plantations (<1,000 ha) and a slight increase of large-scale cultivation (> 1,000
ha).
The following projects were identified:
(1) Green Africa Foundation – 400ha plantation in Kitui District.
(2) Green Power – 200ha plant in Isenya district; forecast to grow to 6,000ha by 2015.
(3) Africa Energy Ltd – 100ha plantation forecast to grow to 10,000ha by 2015.
(4) UNDP GEF – A 70ha plant in Mawindi and Kwane districts, forecast to grow to 240ha by 2015.
(5) Biwako Bio-Lab, Hydronet Energy & Green Africa Foundation – little details are know about this collaboration but it is
expected to total 75,000ha by 2015.
29

30. JATROPHA: EAST AFRICAN MARKET
Tanzanian Policies
At present, Tanzania is lacking clearly defined quality standards for
bio-fuel and a clear regulation for the sale of Jatropha bio-fuels,
TANZANIA
according to country experts.
The Tanzania Investment Centre maintains a database of suitable
land for Jatropha. It offers a one-stop-shop to facilitate land
acquisition as well as permitting and registration processes.
Advantageous tax and duty conditions are offered. The Tanzania
Investment Act (1997) grants investors full rights to buy and sell
land.
The Government has earmarked funding for infrastructure
development, as weak infrastructure has been reported to hinder
project development.
Tanzanian Projects
The large majority (80%) of projects identified is privately owned and profit-oriented. Contracting outgrowers is the most
dominant scheme. Some projects combine this scheme with plantations. Only a third of Jatropha projects include seed
crushing into their project; even less aim at Biodiesel production. Research activities are generally low, but reported to be
stepped up with focus on high yield species, fertilisation and cultivation techniques. Irrigation (mainly manual) is used by more
than half of the projects. Weak infrastructure appears to pose problems to project development.
Although several projects were identified, only the following two disclosed material information:
(1) Diligent Energy Systems – 3,000ha scheme expected to grow to 200,000ha by 2015.
(2) KAKUTE – 150ha plantation due to expand to 800ha by 2015.
30

31. BIODIESEL
 OVERVIEW
 MARKET GROWTH
 FEEDSTOCK CONCERNS
 OUTLOOK
31

32. BIODIESEL: OVERVIEW
Industry Overview What are Bio-Fuels?
The Biodiesel market has experienced an enormous upturn Bio-fuels (biodiesel and ethanol) are liquid fuels from plant
in recent years. Demand is underpinned by the need to origin. Biodiesel is diesel obtained from organic oils, mostly
increase domestic energy security, reduce greenhouse gas vegetable. It is produced by modifying vegetable oils from
emissions from the transport sector and help address an appropriate plants and reducing their viscosity by various
expected shortage of diesel refining capacity. Moreover, methods. Ethanol is produced from sugar and starch.
demand is driven by the aim to increase rural development
as well. Major liquid bio-fuels – straight or recycled vegetable oils,
biodiesel and ethanol, blended with petroleum products or
Today, about 10% of the world’s energy use is still derived without blending, can be used for motorised transport,
from biomass and as much as 80% in developing countries. railways, marine transport, electricity generation, mining,
While the use of traditional biomass such as firewood and agriculture, industry, commerce, defence and other
cow dung is associated with health hazards and multifunctional platforms.
environmental damage, modern bio-fuels offer the promise
of considerable improvement in these areas. They also hold
the prospect of reduced energy import bills and improved
energy security.
Unlike industrialised nations, developing nations with fragile
economies and infrastructures are financially drained in the
purchase of imported, refined petroleum oil. It is thought
that for every $10 hike in the cost of a barrel of crude oil, the
economy of an oil importing country in Africa is impacted in
multiples of the impact on the US economy. As a result,
important gains reaped from debt forgiveness initiatives are
being wiped out by rising energy costs.
Developing regions of the world, including Africa, can
improve their future economic viability and maintain clean
ecological environments by investing now in the use and
production of green energy.
32

33. BIODIESEL: MARKET GROWTH
Biodiesel Markets Benefits of Bio-Fuels
The global market for biodiesel is poised for explosive growth in  Substantially increase economies and employment
the next ten years. Although Europe currently represents 80% of opportunities in developing countries.
global biodiesel consumption and production, the US is now  Foreign exchange savings by reducing fossil fuel imports.
ramping up production at a faster rate than Europe, and Brazil is  Improved energy security, lower emissions of greenhouse
expected to surpass US and European biodiesel production by the gases.
year 2015. It is possible that biodiesel could represent as much as  Biodiesel has a high octane number that improves engine
20% of all on-road diesel used in Brazil, Europe, China and India by performance, high lubricity reducing wear and tear, low
2020. sulphur and aromatics emissions.
 Bio-fuels are simple to use, biodegradable, and reduce air
Biodiesel demand and over-capacity in Europe, the US and Asia is
pollutants such as particulates, carbon monoxide,
driving investment in the global trade of alternative feed-stocks.
hydrocarbons, and are widely excepted as carbon-neutral.
The US market for biodiesel is growing at an unsurpassed rate;
from 25 million gallons per year in 2004 to over 650 million  Sustainable and environmentally-friendly; neat biodiesel is as
gallons in 2008. The total biodiesel being sold in the US amounts biodegradable as sugar and less toxic than salt.
to less than 1% of all diesel consumption. In Europe, biodiesel  Most of the oil-bearing crops enrich the soil.
represents 2-3% of total transportation consumption and is
targeted to reach 6% by 2010. Biodiesel Growth Drivers
 Favourable Economics: Rising petroleum and diesel prices
In China, India, Brazil and Europe, economic and environmental make biodiesel competitive and profitable.
security concerns are giving birth to new government targets and  Environment: An ever increasing pressure to replace fossil
incentives, aimed at reducing petroleum imports and increasing fuels.
the consumption and production of renewable fuels. Europe,  Legislation: Increasing energy security concerns are driving bio-
Brazil, China and India each have targets to replace 5% to 20% of fuels legislation and R&D.
total diesel with biodiesel.  Government Plans: Mandates to produce a certain volume of
bio-fuels to replace automotive fuels by a certain date.
While the US and European governments have put in place  Taxes & Subsidies: Incentives are encouraging the production
financial incentives to run bio-fuel schemes, their farming systems of bio-fuels.
can’t produce the necessary quantities without creating a  Import Dependency: Concerns about petroleum import
considerable risk to the food chain. It is therefore expected that dependency are driving countries to produce their own energy.
the bio-fuel revolution will specifically benefit developing  Economic & Social Development: Bio-fuels are being used as
countries that can produce bio-fuel for their own consumption as socio-economic programs to help under-developed nations
well as for export. improve their local economies.
33

34. BIODIESEL: FEEDSTOCK CONCERNS
Global Bio-Fuel Production Could Expand 5-Fold by 2025
300,000
250,000
Bio Diesel Ethanol
200,000
million litres
150,000
100,000
50,000
-
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Source: Prakash, Adam. 2007. “Grains for food and fuel – at what price?”
Biodiesel Feedstock Concerns
Although the global biodiesel market is growing at a rapid rate, there is a major threat to the sustainability of growth; the price
of traditional biodiesel feedstocks is increasing steeply (see charts on next page), hence jeopardising the profitability of the
industry. The reason for the rising price of traditional feedstocks is the current food crop shortages the world is experiencing
combined with the fact that most traditional feedstocks for biodiesel compete with food crops (or are in fact a source of food
themselves).
The impact is that major biodiesel producing nations are producing far less than their capacities allow (see charts on the page
after next), resulting in a growing output gap across the world. If this is to continue, it is unlikely that the growth the market
has seen will be sustainable and demand will far outweigh supply. In addition, most nations will considerably fall short of their
own biodiesel targets in future years.
It is widely agreed that the solution is to source a new generation of feedstocks that are low in cost, relatively easy to cultivate,
and most importantly do not compete with food production. One of the most promising of such feedstocks is Jatropha Oil.
34

35. BIODIESEL: FEEDSTOCK CONCERNS
Biodiesel Feedstock Prices: 2001 - 2008 Estimated Cost per Barrel ($) of Fuel Produced by Bio-Fuel Feedstocks
Rapeseed Oil Palm Oil
Cellulose 305
1,400
Soybean Oil US Diesel #2
Wheat 125
1,200
Rapeseed 125
1,000
$US per metric ton
Soybean 122
800
Sugar beets 100
600
Corn 83
400
Sugar cane 45
200
Jatropha 43
-
2001 2002 2003 2004 2005 2006 2007 2008
0 100 200 300
Source: Emerging Markets Online – Bio Diesel 2020 Feedstocks Database Source: Goldman Sachs
35

36. BIODIESEL: FEEDSTOCK CONCERNS
Global Biodiesel Production v Capacity Europe Biodiesel Production v Capacity
30 12
Capacity Production Capacity Production
25 10
million tons per annum
million tons per annum
20 8
15 OUTPUT GAP 6
OUTPUT GAP
10 4
5 2
0 0
2002 2003 2004 2005 2006 2007 2008 2002 2003 2004 2005 2006 2007
U.S. Biodiesel Production v Capacity China Biodiesel Production v Capacity
4,000
Capacity Production 140,000
3,500 Capacity Production
120,000
million gallons per annum
3,000
tons per annum
100,000
2,500
80,000
2,000 OUTPUT GAP
1,500 60,000
OUTPUT GAP
1,000 40,000
500 20,000
- -
2004 2005 2006 2007 2008 2002 2003 2004 2005
Source: “Biodiesel 2020: A Global Market Survey”, EBB, USDA, OilWorld, FAS
36

37. BIODIESEL: OUTLOOK
Short Term Outlook
 Growth in multiple feedstocks
 Export growth from alternative feedstocks
 Big plants and refineries open near ports
 Renewable diesel growth
Medium Term Outlook: 2010 - 2015
 Emergence of commercial scale Jatropha
 Export growth from Africa, Asia and Latin America
 Algae commercial scale production emerges
 Growth in commercial and community renewable diesel
projects
Long Term Outlook: 2015 - 2020
 Jatropha and Algae become mainstream commodity
 Global supply shifts from North to South
 Global demand balance from Africa and Asia
 Community projects increase significantly
37

38. UGANDA
 CURRENT ENERGY SITUATION
 NATIONAL ENERGY POLICY
 BENEFITS & BARRIERS TO BIODIESEL
38

39. UGANDA: CURRENT ENERGY SITUATION
Uganda’s Current Energy Situation
Uganda is a land-locked country covering an area of 236,040 square kilometres with an estimated population of over 28 million
in 2006, with a growth rate of 3% per annum; one of the highest in the world. Over the last 2 decades the country recorded a
fairly steady economic growth with GDP real growth rate estimated at average of 6% in the last decade.
Agriculture still dominates the country’s economy, accounting for more than a half of total output and employing over 80 per
cent of the workforce. The majority of the people are peasants that depend on small scale livestock rearing and a wide range of
subsistence crops to meet local needs. Coffee is the main export commodity. Tobacco, tea, fish, hides, skin and sugar as well as
corn and beans have become important export commodities. However, most of this is exported in semi-processed forms as
there are only a few refining industries.
A growing economy combined with a fast growing population means a growing energy demand. Uganda’s energy supply and
utilization is dominated by biomass. Access to electricity in Uganda is limited to 9% of the population, the remaining 91% of the
population mainly use biomass in the form of firewood or charcoal for their energy needs. The country’s energy is derived
93% by biomass, 6% fossil fuels (all imported) and 1% hydro-power.
Uganda has a high potential for hydro-power generation but has installed capacity of only 280MW which in recent years has
fallen to less than 150MW (owing to persistent drought and a resultant drop in the water levels at the Owen Falls Dam) leading
to unprecedented power shortages. This has forced the country to invest in thermal power plants. By the end of 2008 the
electricity generated from thermal plants exceeded 150MW. Use of thermal power plants has increased the country’s
expenditure on petroleum and has hiked the retail price of electricity. Efforts to develop new hydro-power plants are ongoing
but such investments take years to accomplish.
The transport sector in Uganda is totally dependent on imported fossil fuels whose prices had hit all time highs recently, at
close to $140 per barrel of petroleum on the world market and US $ 1.5 per litre pump price. The fuel bill for a country like
Uganda constitutes almost 50% of the budget. The escalating prices of fossil fuels have made it imperative for government to
promote the development and utilization of renewable energy resources including bio-energy and their associated
technologies.
39

40. UGANDA: NATIONAL ENERGY POLICY
Uganda’s National Energy Policy
Uganda’s national energy policy promotes accelerated power generation from renewable resources and emphasizes the
development/adoption and utilization of other modern fuels and technologies. The government’s commitment to develop the
use of renewable energy sources is aimed at creating means for socio-economic development. In implementing the policy the
government expects to address poverty issues, catalyse industrialization and protect the environment.
The renewable energy resources that the policy lists are: biomass, geothermal, hydropower, wind and solar energy. Whilst
biomass sources are widely used for energy generation, the processes are often inefficient. Biomass provides almost all the
energy needed for cooking in urban and rural house holds and in rural industries.
The government’s renewable energy policy recommends blending of diesel with 20% biodiesel. By specifying the maximum
proportion of biodiesel blends the government hopes that investors will be attracted to invest in biodiesel production knowing
that there is a market for it. The bio-diesel will be used for the transport sector and also for rural electrification and farm power
production. The expected benefits from the policy include;
 Improved national energy security by using indigenous renewable energy sources instead of imported fossil fuel
 Create employment and income in rural areas
 Promotion of local renewable natural resources
 Reduced emission of carbon dioxide to the atmosphere
 Promotion of a new source of income to farmers
 Support rural electrification strategy
 Promotion of technology transfer
Blending of all diesel used for transport in Uganda with 20% biodiesel would have translated into a market potential of 100
million litres of biodiesel in 2008 increasing to approximately 200 million litres in 2012 given the annual average increase in
diesel consumption of 17%.
40

41. UGANDA: BARRIERS & BENEFITS OF BIODIESEL
Barriers to Biodiesel Development & Use Benefits to Biodiesel Development & Use
Petroleum deposits have been discovered in the Western Rift
Valley, likely adequate for commercial exploitation. It is feared
that the government will give preferential investment  Substantially increase the economic health of Uganda.
incentives in the petroleum development which will
marginalize bio-energy.
 Improve employment opportunities and rapidly increase
the number of plants operating in the country.
Inadequate Legal and Institutional Framework: There is no
standard procedure and legal instruments to support
investment in bio-energy. Whereas in countries like India they  Massive foreign exchange savings by reducing fossil fuel
have created government funded bio-energy units to promote imports.
its development.
Limited Technical and Institutional Capacity: The public and  Improve Uganda’s competitive advantage amongst
private sectors have limited technical and institutional capacity African peer nations.
to manage bio-energy projects. Training needs to
proportionately emphasize bio-energy in the engineering and
other related professional courses.  Improve Uganda’s energy security, and reliance on
external energy imports.
Lack of Financing Mechanisms: Commercial banks in Uganda
do not offer products that support long term investments.
Long term loans can only be obtained from the East African  Lower emissions of greenhouse gases and importantly
Development Bank and the African Development Bank. But lower local pollution caused by biomass, hence
these banks finance large projects only. increasing the country’s health.
Underdeveloped market: Whereas there is potential for
demand of bio-energy products, the market is not yet  Most of the oil-bearing crops enrich the soil.
developed in order to realize actual demand. The public is also
unaware of the technologies and the products.
Lack of Research and Development Support: There is a dearth
of budgetary support to higher learning and R&D institutions
to carry out adaptive research that can promote the
development of bio-energy in Uganda.
41

42. NEWCO
 INCORPORATION
 MANAGING DIRECTOR
 DEVELOPMENT DIRECTOR
 REMAINING EXECUTIVE TEAM
42

43. NEWCO: INCORPORATION
Incorporation
NEWCO is yet to be incorporated and its establishment is
awaiting heads of terms. Upon agreement, NEWCO will be
incorporated in a manner that is compliant with the relevant
jurisdictions and structures involved.
The management team has in the main been identified and
brought on board. They are now committed to this project
full time and are drawing upon their resources, both
financial and expertise, to ensure this project is executed in
the best interests of all parties concerned.
The current two-strong team is highly suitable for a project
of this nature and it was conceived and put together by
them. They are anticipated to be the driving force of the
project’s completion and will project manage all
stakeholders involved. They bring a wealth of business and
financial experience to the table and have conducted
business in Africa several times in the past on a variety of
projects. As a result, they have visited the continent and
East African region many times and are well connected in
the area.
The current team has identified a small number of industry
professionals they are keen to add to management and are
in discussions with these individuals. The remainder of the
team will be appointed once heads of terms are agreed.
The following pages give further information on the
management team.
43

44. NEWCO: MANAGEMENT TEAM
MUKESH PATEL
Managing Director
The Managing Director of NEWCO is Mukesh Patel. He is a serial entrepreneur and has over the past 30
years successfully set up and run a number of businesses in a wide range of disciplines, amassing a
portfolio worth millions of pounds. Mukesh’s key skill is spotting commercial opportunities early in their
lifecycle, assembling the best team to penetrate the industry and investing into enterprises that
successfully participate and profit in these opportunities.
Mukesh graduated as an Architect and emigrated to the UK from India is 1979. Arriving in the UK with only enough money to
last a few months, he spotted an opportunity in the automobile spare parts trade and quickly set up a business, “Autoland”
from his home in London. Mukesh’s keen eye for value deals and his commitment to excellent service resulted in the business
expanding at an incredible rate. In its first year Autoland turned over £200k and within 18 months Mukesh had moved the
business into an industrial warehouse and took on a number of employees. This part of the business peaked a turnover in
excess of £3 million. During 1998, Autoland was awarded the Queen’s Award for Export Achievement and gained ISO 9002
accreditation in recognition of the quality of its service.
Wanting to diversify his business, Mukesh saw a great opportunity in distributing fashion labels in the UK and Europe.
Leveraging off his logistics and distribution infrastructure and experience, he established “Altec” and acquired distribution
rights for three labels. In addition to this, Altec paired up with an experienced design house in Hong Kong to establish a new
brand, now owned by Altec. This part of the business peaked with a turnover of £4 million.
In 2000, Mukesh established “Prigee International”, created to capitalise on real estate opportunities in the UK. To date, Prigee
has executed a broad spectrum of deals including; investment, asset management, development, planning and yield
compression. Prigee’s current investment portfolio is worth £10 million and is across the residential, commercial and industrial
sectors. The industrial portfolio has asset management opportunities and is likely to increase the value of the portfolio
significantly.
Today, Mukesh is well known in the business community and his network of contacts and advisers in real estate, industry and
retail markets provides him a great number of introductions to excellent business opportunities.
44

45. NEWCO: MANAGEMENT TEAM
AMIT PATEL
Development Director
Amit has a Bachelors Degree in Banking & International Finance from Cass Business School, London, and
is a member of the Chartered Institute of Bankers.
Amit spent a number of years working in the Investment Banking and Private Equity community in
London where he built extensive experience in the following disciplines;
LEVERAGED FINANCE: Providing senior, mezzanine and junior debt to Private Equity Firms on large buyouts (over £1billion).
INTEREST RATE DERIVATIVES: Structuring highly complex interest rate derivatives for corporate clients for hedging short
term exposures and long term packages.
SECURITISATION: Packaging balance sheet residential mortgages into mortgage backed securities and large commercial
mortgages into conduit programmes and asset backed securities.
PRIVATE EQUITY (REAL ESTATE): Providing large equity and debt packages into real estate focussed transactions, including;
commercial real estate, care homes, retail companies, housebuilders, hotels, funds, and garden centres.
Amit has worked on an array of transactions including high profile public-to-privates, joint ventures, fund creations, financial
markets arbitrage opportunities and other multi-billion pound buyouts.
After leaving the City in 2008, Amit set up a lead corporate finance advisory boutique, “AP Corporate Finance”
(www.apcorporatefinance.co.uk) , advising a range of corporations on mergers, acquisitions, disposals and capital raising.
Amit’s firm has worked with Mukesh Patel on a number of transactions in the past on an advisory and joint venture basis.
Amit brings to NEWCO a wealth of business development, financing and structuring experience, and his firm is acting as lead
corporate finance advisor to NEWCO. His role as Development Director at NEWCO will continue throughout the life of the
project, and he will oversee all new business development opportunities alongside monitoring the project’s performance over
its life.
45

46. NEWCO: MANAGEMENT TEAM
TO BE RECRUITED
Chief Agronomist
We aim to recruit a Chief Agronomist. This addition will provide valuable scientific speciality to the
management team and enable NEWCO to design and implement the most efficient techniques to
cultivating jatropha. This officer will bring expertise in feedstock as well as optimal growing conditions
and schematics of the plantation and will also be the main liaison between NEWCO and its energy
partner.
We are currently in discussions with a number of specialists in this area and have produced a shortlist.
The Chief Agronomist will be appointed upon signing of heads of terms with the Ugandan government.
TO BE RECRUITED
Operations Director
NEWCO is in negotiations with a shortlist of bio-fuel plant and machinery experts, and will appoint an
individual to the position of Operations Director upon signing of heads of terms.
The Operations Director will be responsible for sourcing all plant and machinery for the enterprise and
overseeing installation of these assets on NEWCO’s land. He/she will also oversee the daily operations of
the business and report directly to the Managing Director.
TO BE RECRUITED
Further Team Members
NEWCO has identified a small number of additional personnel it wishes to recruit, either on a consultancy
or permanent basis. These individuals will assist the main management team execute the business plan
in the start up phase through to completion. Recruitment here will occur on an adhoc basis, as and when
required.
46

47. FINANCING
 FINANCING OPTIONS
 PRIVATE EQUITY
 DEBT
 CARBON CREDIT FINANCE
47

48. FINANCING: OPTIONS
Financing Options Private Equity
Funding for NEWCO will be finalised upon agreement of There are over 50 private equity funds specialising in African
heads of terms. The management team have identified renewable energy projects.
several options available to pursue, all of which are sourced
in the region. Seeking funding from outside of Africa is
unlikely to be successful as most European and American The financing appetite for private equity in the region has
lenders are highly reluctant to fund projects of medium sized increased over the past three years as firms look outside of
enterprises in the region. Europe and America for returns.
The funding is likely to be a combination of the following
We have identified a number of potential partners in this
instruments:
area and have begun early stage discussions with them. They
have displayed a keen appetite to join the project as a
 Equity partner.
 NEWCO’s own capital
 Private equity fund focused on the African
energy market
 Debt
 Asset Financing
 Import/Export Financing
 Structured Finance
 Carbon Credit Financing
 Kyoto Protocol’s Clean Development Mechanism
(“CDM”)
 Carbon Credit Trade Finance Program (“CCTFP”)
 Grants
48

49. FINANCING: OPTIONS
Debt – Import & Export Finance Special Purpose Vehicle – No Recourse Debt
The African Export-Import Bank (Afreximbank) was A possible structure to follow is that of Special Purpose
established in 1993 by African governments, private and Vehicle (SPV). In this structure, the actual project is ring-
institutional investors and other non-African financial fenced into the SPV and so the funding is on the SPV’s
institutions for the purpose of financing, promoting and balance sheet, and not on NEWCO’s. Off balance sheet has
expanding intra-African and extra-African trade. benefits for both NEWCO and any financiers.
The bank has a programme called the “Export Development In this structure, lenders have no recourse to NEWCO, but
Programme”, and under this Project-Related Financing is depend entirely on the project itself as a source of capital
available to energy and infrastructure projects such as this and interest payments. Because of this, lenders will seek to
one. gain as much control as possible over the SPV’s cash flow.
Debt – Structured Finance SPV Structure
Structured Finance in Africa allows a commodity-based company
to leverage a proportion of its future export earnings to support
improved funding terms of issuance. The structure rests on the [NEWCO]
following:
Tech PE
 Exporter: Good track record, good credit quality Partner Partner
 Foreign Buyer: Good payment risk, multiple buyers are
preferred
 Country: Political stability SPV
 Product: Commodity with official spot market price and
possibility of hedging forward prices Govt
Borrower
Partner
Using this structure utilises receivables as collateral. The
Biodiesel
biodiesel financier will provide debt and secure this against future Purchaser
receivables due to the biodiesel plant from purchasers.
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50. FINANCING: CARBON CREDITS
Carbon Credit Finance
Over the past century, the amount of carbon dioxide in the atmosphere has risen, driven to a large extent by usage of fossil
fuels, rising population and increasing consumption. This has led to an increase in average global temperatures.
In a regulatory attempt to cap CO2 emissions, the Kyoto Protocol was signed by a large number of countries. The protocol now
allows companies who are able to contribute to the decrease in emissions through environmentally friendly projects to receive
carbon credits from countries that contribute to the increase of CO2 in the atmosphere. These substantial payments are
regulated by a special committee and is sponsored by lead commerce banks that enable financing of carbon credits towards
future proceeds. The Kyoto Protocol’s system is known as the Clean Development Mechanism.
Any biodiesel producing venture would qualify as a carbon reducing project and would be eligible to receive carbon credits.
Every 5.9 million litres of biodiesel produced qualifies for 10,000 Certificates of Emission Reductions (CERs), which can be sold
on the carbon trade market. 10,000 CERs is currently worth €125,000. One CER is awarded for every tonne of CO2 offset. To
put this into context, a 5,000 hectare jatropha farm would potentially receive over €500,000 per annum in CERs alone. Whilst
this is the current market, owing to global uncertainty of the Kyoto Protocol post 2012 and the recent walk out of African
nations in the Copenhagen Summit on Climate Change, we are assuming that the project would receive CERs at the lowest
possible quantum. In effect, the likely revenue generated via CERs is considered upside potential.
The World Bank estimates that this market will grow from its current annual value of $30 billion to over $100 billion.
The Clean Development Mechanism offers an immense opportunity for nations or continents that are low green-house gas
emitters, of which Africa is the lowest emitter.
Many banks are now introducing Carbon Credit Trade Finance programmes, whereby loans are provided in advance and
secured against future CER payments due to the borrowing project.
As discussed above, not only will carbon credits potentially ease the funding process, but CERs will provide a substantial
additional income to the biodiesel plant.
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51. FINACING: CARBON CREDIT MARKET
Barriers to Carbon Credits in Africa Annual CERs in Africa
1%
The following two charts highlight that Africa is currently
heavily underweighted in the carbon trade market, and
within the continent Uganda is not represented sufficiently. 14%
Egypt
30%
Morocco
Execution of this project will bolster Uganda’s experience
Nigeria
with registering projects with the Clean Development
Mechanism. 20% South Africa
Tunisia
 Complex CDM procedures 5% Uganda
30%
 Transaction cost to hire service providers
 Knowledge gap between carbon credit buyers and Global Carbon Market – Registered Projects
suppliers
17
 Limited access to finance by potential developers
 Financial intermediaries lack of knowledge about CDM Africa
255 Asia Pacific
 Lack of trained national CDM consultants
Other
377 Latin America
 Heavy institutional requirements for project cycle
6
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52. FORECASTED FINANCIALS
 BASIS OF FINANCIALS  PROFIT & LOSS FORECAST
 HIGHLIGHTS  CASH FLOW FORECAST
 ASSUMPTIONS  RETURNS FORECAST
52

53. FORECASTED FINANCIALS: BASIS & HIGHLIGHTS
Basis of Financials Highlights
We have engaged a top tier renewable energy consultancy PROFIT & LOSS
firm in the US to assist management form a financial model
for this project. The US consultancy is highly experienced
 The first two years are EBITDA negative owing to low turnover
with biodiesel plants and specifically Jatropha as a
(the plant will not refine imported feedstock as it is not
feedstock. The firm has advised on numerous plants of this
economic), along with labour and significant fertilising and
nature (and much larger) around the world.
chemical costs.
Our energy consultants have designed an early stage site
 Upon plant maturity (Year 5), revenue of over $5 million is
schematic (agri-system and refinery) and modelled all costs
generated per annum, and a resulting EBITDA of $3.4 million
and revenues for a plant of this nature. This work forms the
basis of our financial model and is highly prudent; our view is per annum.
there is potentially significant upside in the forecast. For
example, the price of diesel per litre achieved by the plant  Retained Profit from Year 5 onwards is $2.4 million per annum
has been modelled as $1.00 for the entire life of the project; (assuming oil prices do not appreciate).
our long term outlook for the price of oil products is one of
expected appreciation, and hence the plant’s revenues
 Revenue is primarily generated from the sale of biodiesel, but
would be expected to grow in line with the wider oil market.
additional revenue is made from the sale of jatropha cake and
In addition, the value of carbon credits has been modelled at
receipt of carbon credits.
the lowest end of the spectrum owing to Kyoto Protocol
uncertainties post 2012.
 The majority of the project’s operating costs are associated
with labour and chemical catalyst costs (the latter are assumed
On the following pages, all salient aspects of our model have
to be imported and hence attract premium pricing).
been highlighted. It is acknowledged that at this stage, the
model is subject to change and a new model will be
constructed upon progression to the next stage of the  The model assumes that profits are accumulated as reserves; in
project. reality dividends would be paid.
Our energy consultants share our optimism for this project  Tax has not been included at this stage as this is subject to
and have indicated that they would be very keen to remain negotiation and it is hoped that a significant tax moratorium
involved in the project should it progress, either as a partner will be granted to the project.
or primary consultant.
53