Makeni Ethanol and Power Project, Sierra Leone

Makeni Ethanol and Power Project

Sierra Leone

South at the Steering Wheel

SEI, SIANI, Stockholm, 28 May 2012

Jörgen Sandström

About Addax Bioenergy

Addax Bioenergy

� Developing a Greenfield renewable energy and agriculture project at Makeni, Sierra Leone

� Produce bio-ethanol for export and domestic use, and green electricity for the national grid.

� FAO define the project as Integrated Food-Energy System (IFES) for People and Climate

� Project aims to become a model for sustainable development, through the respect of strict

sustainability standards and the introduction of innovative social solutions.

� Designed to comply with the following laws and standards:

• IFC Performance Standards

• AfDB Standards

• Equator Principles

• EU RED Directive

• Roundtable of Sustainable Biofuels and Bonsucro standards

Sierra Leone: facts and figures

Sierra Leone facts (FAO 2010):

People : 5 mio

Surface : 7.2 mio ha

Forest cover : 1 mio ha

Arable land : 5.3 mio ha

Cultivated land : 0.8 mio ha

Rainfall : ~3000 mm

2 mio ha = 2050 food security target

3.3 mio ha = available

Gently undulating estate lands in Bombali District

Aerial pictures from the project area

Sierra Leone land use

Project overview

Bumbuna dam

Makeni-Freetown highway

Rokel river

Power transmission line

Rokel river

Magbass plantation

Freetown (150km)

Bumbuna Dam

Rokel River

Project Area

Export Terminal

Project scope

The Makeni Project

Location near Makeni, Central Sierra Leone

Project features

Feedstock Sugarcane

Factory Ethanol and Power

Market EU export and national grid

Carbon credits CDM mechanism

Project capacity

Plantation size 10’000ha, irrigated, mechanized

Processing capacity 1 mio tons of cane p.a.

Ethanol output 85’000m3 p.a.

Excess power 15 MW

Workforce > 2000 (currently >1200)

GHG savings ~190’000 t CO2 p.a.

Investment EUR 267mio – project financed

Timing Construction 2009 - 2014

First production 2013

Proven integrated sugarcane ethanol and power indus try model for domestic and export markets

Participating DFI’s

Project developed in partnership with eight European and African Development Finance

Institutions (DFI’s):

Netherlands Sweden Germany

Belgium CanadaSouth Africa

United Kingdom

African Development Bank

African Renewables Deal of the Year 2011 Award by PFI and PFM (Reuters and Euromoney)

• Project fully funded by AOG and DFIs

• Financial Close on December 2011

• Loan tenor 12 years

Why sugarcane ethanol

0 10 20 30 40 50 60 70 80 90

U S C orn

C h ina C orn

U S B ee t

E U W hea t/B ee t

B razil C ane

A us tra lia C ane

Thailand C ane

S ie rra Leone C ane

U S S oybean

U S /E U W as te o il

E U R apeseed

U S cen ts p er litre

B iod iese l

S ugar

B ee t / W heat

C orn

PROVEN

MODEL

1. Sugarcane grows in most of sub-Saharan Africa 2. Best CO2 savings by far

4. Highest yield per hectare3. Lowest production cost

Best CO2 savings

Production cost

Industrial model

Bagasse

Crushing Juice Fuel ethanolEthanol distillationSugarcane

Electricity co-generation

Sierra Leone power grid

10,100 ha 950,000 tons sugarcane p.a. 83’000 M3 p.a.

32 MW377,000 tons p.a.

64’500 MWh p.a.

100’500 MWh p.a.

Integrated production process using all main and bi-products = Lowest production cost + Highest carbon savings

� Sugar juice fermented and distilled to Ethanol

� Sugarcane fibres (Bagasse) used as boiler fuel for Power Plant

� Green cane harvesting: leaves left in field protect and enrich soil quality

� Distillation residues (Vinasse) used as fertilizer

Power generation

� First Independent Power Plant (IPP) in

Sierra Leone

� 20-year Power Purchase Agreement

signed with Government and ratified by

Parliament

� 100’000 MWh p.a. fed into national grid

� Complements seasonal production

profile of Bumbuna dam

� Production during cane season and into

off-crop season

� Sugarcane fibres (bagasse) feedstock

� 2x80 ton 67 bar boilers; 32 MW turbine

� Power plant built by Isgec John

Thompson

� 10km HV line built by Cegelec (Vinci

Group)

Addax power (red) helps level seasonality of Bumbun a hydro-dam (blue)

State of the art co-generation power plant

Field operations

Harrowing of cane field under pivot

Road construction Planting

© Addax Bioenergy 2011 | Disclaimer | Site map

Field operations

River manifold

Booster pump house Storage dam

Pipe to booster pumpsLand Preparation Seedcane hauled from Block 16 to Block 7

Planting in Block 7 Recently planted cane in Block 7


Cane fields under irrigation

Pivot in Block 16

Pivot in Block 7


Factory lay-out

• Cane crushing mill

4800 tons per day

Isgec – John Thompson

• Fermentation and

Distillation

380’000 l Ethanol per day

Praj Industries

• Power Plant

32 MW capacity

Isgec-John Thompson

• Civil works

CSL Group

• EPCM construction

management by De Smet

• Cane crushing mill

4800 tons per day

Isgec – John Thompson

• Fermentation and

Distillation

380’000 l Ethanol per day

Praj Industries

• Power Plant

32 MW capacity

Isgec-John Thompson

• Civil works

CSL Group

• EPCM construction

management by De Smet

Factory works

Workshop foundations

Site campCement mixer

Boilers assembled in India

• Engineers mobilized

• Factory road cleared

• Civil works started

• Site camps established

• Admin and clinic built

• Foundation works

underway

• Distillery and Power

plant in Workshops

in India

• Commissionning Nov

2013


Factory Site

Site campDistillery foundations

Foundation works

Fermentation tank foundations and workshop


Factory Site

Site camp

Factory clinic

Factory office block

Residential houses

Water treatment plant


Project philosophy, design and ambitions

Foundations

Addax principles and experience with community relations in Africa� Long-term win-win community inter-action

� Commercial success is key but must be sustainable (economic, social, environmental)

EU RED sustainability criteria for biofuels� Avoid displacement

� Protection of biodiverse areas

� Carbon life-cycle analysis

IFC Performance Standards – project focus on � Food security

� Land rights

� Physical and economic displacement - resettlement

� Nobody worse off than before

Law of Sierra Leone� SLEPA

� Water Act

� Land Act

Impacts: Avoid if you can, mitigate if you can’t

Land selection criteria

Impact assessment

Avoid physical resettlement

= villages, settlements

= buffer zones

Protect bio-diversity

= biodiversity no-go areas

= riparian forests; forested areas

= 75 m buffer from rivers

Minimize economic displacement

= subsistence farming - rice paddies

= areas of intense agric activity

= Firewood, Cattle grazing, Fishing

Agriculture criteria

= bulk water supplies (proximity to river)

= radius around factory

= topography, drainage

= soil type

Extensive use of GIS in land selection

Categories

Type 1: 0 peopleType 2: 8 peopleType 3: 13 people

Number of villages

Total villages in project area: 68

Population

Total population in project area: 13’600

Each field and structure counted, groundtruthed and mapped using Geographical

Information Systems (GIS)

GIS and ground assessment of people, infrastructure and land

Burnt land, river and village areas Fallow and permanent croplands

Infrastructure and grasslands Infrastructure and grasslands


Extensive land use assessment

Final land use assessment

Savannah use: Grasslands 36% - Scrublands 32%

Cropland use: Permanent 2.3% - Fallow 9%

Village use: 0.1%


Project environmental and social processes

Level Five

� Opportunities – People in project area prioritised for job opportunities

Level Four

� Mitigation through Social Environmental Management Programme (SEMP)

� 29 individual management plans (ESMPs) with FDP being the flagship programme

Level Three

� Compensation through formal RAP Process

Level Two

� Land Lease process including Acknowledgement Agreement targeting land owners

� Coherent and transparent process - Lease of 5 USD per acre (abt 12 USD per hectare)

Level One

� Formal Stakeholder Engagement Process including Grievance process

� Environmental Social impact Assessment (ESHIA)

� 14 individual specialist studies


Project key guidance

Management of Expectations

Local dynamics and complexities

Coherence

Transparency – Disclosure

Addax NOT alone in its project area

Innovative dual land acquisition process

Two documents cover land acquisition:

Land Lease and Acknowledge Agreement

Total Rent

US$ 5 per acre - (US$ 12 per hectare)

(US$ 3.60 from LL plus US$ 1.40 from AA)

Distribution of Land Lease monies

50% Landowner

20% Chiefdom Council

20% Districts,

10% GOSL

Acknowledge Agreement = US$1.4 directly paid

Land owners rent – Monies received

Total amount US$ 3.20 = 63% of total rent

(US$1.8 from Land Lease plus US$1.4 from AA)

Plus direct Compensation for lost crop

Formal compensation process

Land lease Acknowledgement Agreement

One year long bottom-up approach

� Countless meetings organized with stakeholders

in project area since 2007

Public disclosure

� All Land Lease and ESHIA documentation

Stakeholder consultation

� The Paramount Chiefs

� Section Chiefs

� Village Heads

� Landowners

� Community Elders

� Members of Parliament

� Mayo and Councilors

� NGOs

� Ward development committee

� Women's Cooperative

� Women's Leaders and Youth Leaders

� Regional Commander

� Media

Stakeholder engagement during land acquisition proc ess

Discussion on Land Use

Project presentation to District CouncilOne of many community meetings

Media coverage


Village boundaries and compensation process

� Great number of meetings and activities held in Sierra Leone over the last three years presenting project information, land lease

and documentation with special focus on land owners

� Legal representation to Landowners by Franklyn Kargbo & Co

� Addax started the compensation process in 2010

Landowners and their lawyers discussing land lease documentation Addax and landowners discussing project layout and demarcation of

village boundaries

Survey of village boundaries

First real GIS maps created First real GIS village maps created


Village boundaries and compensation process

In over 60 villages;

- Village boundaries established,

- AAs' signed

- Compensation paid

Compensation process expected to

Be completed in 2012


Signing of Acknowledgement Agreements

Signing ceremonies with participation of land owners, Chiefdom Council local authorities, NGO/CSOs, media


Signing of Acknowledgement Agreements

Land owners receive fact packs, maps and checks


Improvements with the Addax Land Lease process

� Appointment of Legal Representation by Landowners

� Extensive public legal consultations with Landowners

� Lease negotiations between Addax and Landowner’s law firms

� Public authorization given by Landowners to Chiefdom Council to

sign on their behalf

� Acknowledgement Agreements directly signed with Landowners

(new invention)

� Direct payments to Landowners; their share in the lease increased

to 64%

� Survey of village boundaries for fair compensation to Landowners

� Relinquishment of un-used lands within 5 years

� Water Rights Agreement (first company to seek license)

Signing of Acknowledgement Agreements in Malal Mara Chiefdom on 27 May 2011

Town hall meeting with landowner’s lawyer and Addax social manager


Innovative approach to livelihoods and food securit y

THE FARMER DEVELOPMENT PROGRAMME (FDP)

Ensure minimum impact on food crop production areas and that

large areas of land are available within the project area for

communities:

� Aligned with Government and donor agricultural strategy

� Developed in cooperation and building on FAO experience

� Assisting smallholders towards becoming self-sufficient

� Training > 2000 farmers during 30 week FFLS training courses

� First 118 farmers graduated February 2011 (70% were women)

� >2000 ha of lands to be prepared under the Addax FDP

� Currently largest food production programme in Sierra Leone

Achievements to May 2012

� 1300 hectares planted

� 1600 tons of rice harvested

� > 1400 farmers trained in better farming practices


Female FDP graduates in majority

35

Fleet of FDP tractors and implements


FDP lands established in the project area


Employment

Currently over 1200

employees

In Operations > 2000

permanent employees

Local communities

prioritized for employment

Mandatory HSSE

monitoring and protective

equipment

Health care

On-the-job and classroom

training

Mechanics in Workshop

Electricians

Painters

Payday

38

Salaries paid to local

workers since April 2010 =

2.046 million US$


Lessons learned Skills and Vocational Training

Farmer Field and Life Schools

(FAO curriculum) introduced

>1400 farmers trained in

better practices

On-the job and classroom

training for artisan employees

Literacy and Numeracy classes

for employees

Expat artisan train local

workers

Graduate Advancement

Programme - GAP

Rokel Technical Institute

(TVE school) project

Community skills projects:

Water and Sanitation, Fire and

Traffic safety, Forestry New training facility (classrooms and workshop)

Graduation ceremony

On-the-job training

Farmer school training site

39

Crop test plot

Female operators trained by Addax


Employee and Community Health

Comprehensive Health Impact

Assessment in ESHIA process

2 Field Clinics and 2 Ambulances

serve workers, families and

communities in emergency

situations

Factory clinic under construction

Health Monitoring Plan

implemented

Water and Sanitation Project

Awareness Campaigns

Factory clinic foundations

Field clinic and ambulance

Awareness campaigns

Serving communities

41


Other Community Benefits

New houses built with money from compensation / lease payments

42

Influx of Cash (land lease,

compensation, salaries)

and economic activity =

direct and indirect benefits for

the local communities

• Contracts awarded to local

contractors (April 10- March 12):

12.7 million US$

• Construction: New Houses and

Sanitation

• New haulage roads used as

access to market

• Families can afford to pay

schooling fees

• New services: Catering,

Bakeries, Mechanics etc

Field kitchen

New haulage roadSchool children


Monitoring plan approved in 2011

Social and Environmental Monitoring Programme

consisting of 12 different parameters

Collection of baseline data

� Environmental monitoring (Soil, Air, Water etc.)

� Social monitoring (40 livelihood indicators

tracked

� Health monitoring (diseases, hygiene)

� Quantitative and Qualitative Data

� Samsung Tablets to allow processing

Environmental & Social Monitoring is paramount

End of presentation

Inspiring Change – Growing Solutions

www.addaxbioenergy.com

Business

Makeni Ethanol and Power Project, Sierra Leone