AfDB Experience in Bioenergy Finance Geoffrey Manley Principal
Investment Officer Private sector Operations Department African
Development Bank
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Outline Introduction What projects are bankable? Three Keys
Project Examples
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Emerging AfDB approach to bioenergy Policy: 2009: Bioenergy
concept note 2011: Bioenergy to be mainstreamed in forthcoming
Energy Strategy Operations: 2010: first project with bioenergy
component 2011: first pure bioenergy project Current focus on
sugarcane-based projects Food and fuel
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Why focus on sugarcane? Proven agriculture, proven technology
Can be implemented at scale Most energy efficient feedstock
Significant carbon savings Electricity co-generation valuable in
African context Ability to incorporate other sugar feedstocks such
as sweet sorghum and cassava
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Three keys to Bankability Sustainability
StructuringSponsorship
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Bankability: Sponsorship Financial muscle: Development costs =
$5-30 million Substantial contribution to project costs Completion
support Expertise: Agricultural, technical, market Capacity:
Human/institutional resources to project development Sustainability
Structuring
Mali: Markala Project Project Description 15,000 ha irrigated
sugarcane to sugar, ethanol and power PPP structure: Government
financing of agriculture component, private financing of industrial
component 15,000 ha irrigated sugarcane to sugar, ethanol and power
PPP structure: Government financing of agriculture component,
private financing of industrial component Business Strategy
Domestic/regional markets Revenues: 75% sugar, 15% ethanol, 10%
power Strong outgrower component: 40% of cane Domestic/regional
markets Revenues: 75% sugar, 15% ethanol, 10% power Strong
outgrower component: 40% of cane Financing Structure Total cost:
$280 million industrial component, 60/40 debt/equity Equity:
Sponsor, local investors, Government Debt: DFIs (regional and
international) AfDB role: lead arranger, lender (private and
public) Total cost: $280 million industrial component, 60/40
debt/equity Equity: Sponsor, local investors, Government Debt: DFIs
(regional and international) AfDB role: lead arranger, lender
(private and public) Benefits Strong job creation Eliminate sugar
production deficit Renewable electricity supply Strong job creation
Eliminate sugar production deficit Renewable electricity
supply
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Sierra Leone: Addax Bioenergy Project Description 10,000 ha
irrigated sugarcane to ethanol and power Roughly 85,000 m3 annual
production Farmer development program for food production 10,000 ha
irrigated sugarcane to ethanol and power Roughly 85,000 m3 annual
production Farmer development program for food production Business
Strategy Ethanol to EU, electricity for domestic market Revenues:
75% ethanol, 25% power Core plantation initially, outgrowers added
later Ethanol to EU, electricity for domestic market Revenues: 75%
ethanol, 25% power Core plantation initially, outgrowers added
later Financing Structure Total cost: $340 million, 60/40
debt/equity Equity: Sponsor + DFIs Debt: DFIs AfDB role: Lender
Total cost: $340 million, 60/40 debt/equity Equity: Sponsor + DFIs
Debt: DFIs AfDB role: Lender Benefits Strong job creation Renewable
electricity supply Export generation Strong job creation Renewable
electricity supply Export generation
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East Africa: Add-on Bioenergy Project Description Expansion of
electricity generation capacity of existing sugar mill to 40 MW of
which roughly 30 MW to grid through PPA with national electricity
utility Business Strategy Domestic markets Revenues: 85% sugar, 15%
power Exclusive reliance on outgrowers Domestic markets Revenues:
85% sugar, 15% power Exclusive reliance on outgrowers Financing
Structure Total cost: $60 million, 70/30 debt/equity Equity:
Sponsor Debt: DFIs AfDB role: senior lender, project development
funding Total cost: $60 million, 70/30 debt/equity Equity: Sponsor
Debt: DFIs AfDB role: senior lender, project development funding
Benefits Renewable electricity supply Expand outgrower network
Renewable electricity supply Expand outgrower network
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Concluding thoughts Bioenergy in Africa still in its infancy
but could be part of the solution to the global energy challenge
Africa has great potential and a number of business models may be
viable Food vs. fuel: from mutually exclusive to mutually
reinforcing
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Questions How can the Bank help Africa tap the potential for
small-scale distributed bioenergy? Should the Bank play a role
helping countries to develop national or regional bioenergy
policies and frameworks? How? How can carbon initiatives be better
leveraged for bioenergy? Would a bioenergy scorecard be helpful for
Bank decisionmakers in this sector?