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Biofuel plant to be built in Sierra Leone

Hydrocarbon Engineering,

Addax Bioenergy S.A. a subsidiary of the Swiss-based energy group, The Addax and Oryx Group Limited (AOG), announced today the signing of a loan agreement with seven European and African development institutions for an integrated renewable energy and agriculture project near Makeni, in Sierra Leone.

The company plans to build a Greenfield sugarcane plantation, an ethanol refinery and a biomass fuelled power plant. Sugarcane, which is widely recognised as the most efficient and sustainable crop for biofuel production, will be converted into bioethanol to meet demand in European and domestic markets, helping replace dependence on fossil fuels and to reduce greenhouse gas emissions. The power plant will provide renewable electricity for the ethanol refinery and will supply approximately 20% of Sierra Leone’s national grid. In addition, the Project incorporates measures to contribute to food security and socio-economic development in one of the poorest regions in the country.

Under the agreement, the African Development Bank (AfDB), the Emerging Africa Infrastructure Fund (EAIF), the Netherlands Development Finance Company (FMO), the German Development Finance Institution (DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH), the South African Industrial Development Corporation (IDC), the Belgian Development Bank (BIO), together with Cordiant managed ICF Debt Pool, are providing debt financing of €133 million. The Swedish Development Fund (Swedfund) and FMO are to join AOG as equity partners. The total size of the investment is estimated at € 258 million.

The agreement follows over three years of rigorous evaluations of the potential social, environmental and economic impacts of this innovative project, which aims to become a model for sustainable investment in Africa.

The project has been developed alongside one of the most extensive and transparent dialogue and consultation processes ever carried out in Sierra Leone, according to the country’s Environmental Protection Agency and local NGOs. “The extensive dialogue over more than two years with landowners, local chiefdom councils, national authorities, civil society, NGOs and others has been at the heart of a series of breakthrough solutions that we hope will set a good example for further sustainable investments in the future,” commented Nikolai Germann, Managing Director of Addax Bioenergy.

The location of the fields and irrigation systems within the sugarcane plantations has been carefully selected to protect biodiversity and existing farmland. Less than one third of the leased area will actually be used by the project, keeping impacts to a minimum.

Construction will begin later this year, with production becoming operational in 2013. The project already employs over 700 people and will create over 2000 jobs in steady operations.

In accordance with Sierra Leone law, the land for the Project was leased from traditional landowners through the local chiefdoms, who were represented by a law firm they engaged throughout the negotiations. To ensure that the landowners will receive their contractual share of the annual rent, landholdings have been mapped in close collaboration with local communities, giving official physical land title and ensuring direct lease payments to the local landowners for the first time.

To compensate for the fact that by growing sugar cane for biofuels and thus removing productive land from arable use Addax Bioenergy has also set up a dedicated Farmer Development Programme to develop over 2000 hectares of land to produce food for the local communities. This is complemented by a farmer training programme developed together with the United Nations Food and Agriculture Organization (FAO). This programme offers practical courses to 2000 farmers to improve the productivity and efficiency of their subsistence farming practices.

“The Addax Bioenergy Sierra Leone (ABSL) project is a top priority for the Government of Sierra Leone. The Project represents the largest private sector investment in Sierra Leone’s agriculture sector to date and should provide a tangible example of successful investment in the country. It will broaden electricity supply throughout the country, enhance productivity in agriculture and improve the country’s standing as an investment destination,” the African Development Bank said.

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