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USAID-NEXTT PROJECTS

FEASIBILITY REPORT/ BUSINESS PLAN


ON
JATROPHA VALUE CHAIN
AGRONOMY TO AGRI-BUSINESS

July 2017
This publication is prepared by Yinka Ogunseyinde & Co. and produced for review by the USAID-NEXTT Project. This is an
assignment commissioned by Carana Corporation under the USAID-NEXTT Project.
USAID-NEXTT PROJECT
PROCESSING JATROPHA FRUITS TO BIODIESEL
Feasibility Report / Business Plan

Disclaimer
The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International
Development and the Nigeria Expanded Trade and Transport or Carana Corporation.

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DATA PAGE
Contract Number: 215006-FPC-YO&Co-02

Contractor Name: Carana Corporation

Name of the Component: Jathropha Value Chain Development

Date of Report: July 2017

Document Title: Processing Jathropha Fruits to Biodiesel

Author’s Name: Yinka Ogunseyinde & Co.

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ABSTRACT:

This project is to present a business case for sustainable and profitable Biodiesel production in Nigeria: Exploiting the
synergies that exist between the nation’s agricultural resources and its energy needs.

The project aims to promote investment and trade in the Jathropha Curcas value chain in Nigeria.

In an effort to achieve this, studies have been carried out to highlight the investment opportunities available for both domestic and
international investors in the Agronomy and the Agribusiness sector of the value chain.

The information used in the preparation of this report was gathered from various reliable sources that include the statistics obtained
from Nigerian Energy Regulatory Commission, Nigerian National Petroleum Corporation and the National Bureau of Statistics in
Nigeria. Statistical data from Bio fuel Magazines and International industry averages have also been used as basis for the preparation
of the financial projections to this report.

This report provides a financial and economic analysis of the opportunities available in the sector and identifies the potential
technical strengths and challenges that may be encountered by the investor(s) in undertaking the identified project. The report
however, helps the reader to develop an understanding of the operational aspects (equipment, human resource, infrastructure, etc.)
in the sector and its growth potential in the country.

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ACRONYMS

USAID United States Agency for International Development

NEXTT Nigeria Expanded Trade and Transport

NBS National Bureau of Statistics

BMGF Bill and Melinda Gates Foundation

FMARD Federal Ministry of Agriculture and Rural Development

NNPC Nigerian National Petroleum Corporation

NERC Nigerian Energy Regulatory Commission

PPPRA Petroleum Products Pricing Regulatory Agency

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TABLE OF CONTENTS

ABSTRACT 4

ACRONYMS 5

TABLE OF CONTENTS 6-9

1.0 EXECUTIVE SUMMARY 10-16

2. 0 PROJECT BACKGROUND AND OVERVIEW 17-20

2.1 Introduction

2.2 Description of Jathropha Value Chain

2.3 Project Concept

3. 0 JATROPHA CURCAS PLANTATION 21-32

3.1 Advantages and Disadvantages of

3.2 Food vs Energy Debate

3.3 Characteristic of Jatropha Curcas

3.4 Cultivation Technology

3.5 Jatropha Intercropping Technology

3.6 Risk and Mitigant

3.7 Human Resources on Agronomy

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4.0 CLEAN DEVELOPMENT MECHANISM AND NIGERIAN BIO-FUEL POLICY 33 – 40

4.1 The Clean Development Mechanism (CDM)

4.2 Nigerian Bio-Fuel Policy and Incentives

4.3 Amendment to National Policy on Biofuel Production and Distribution

5.0 AGRONOMY FINANCIALS 41- 53

5.1 Project Design Assumptions

5.2 10 Year Projected Balance Sheet

5.3 10 Year Projected Cashflow

5.4 10 Year Projected Revenue and Expenditure

5.5 Project Returns

6.0 AGRI BUSINESS 54-72

6.1 Processing of Jathropha Oil to Biodiesel

6.2 Transesterification Process

6.3 Biodiesel Production & Storage

6.4 Processing Machines and Pathway

6.5 Machines & Equipment

7.0 MARKETING 73-80

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7.1 Local Demand

7.2 Global demand

7.3 Prospects/ Benefits of Biodiesel Production

8.0 PROPOSED PROJECT LOCATION 81-83

8.1 Site Design

9.0 HUMAN RESOURCES 84-91

9.1 Organizations and Staffing

9.2 Profiles, Job Description and Remuneration

9.3 Staff Training and Development Policy

9.4 Training and Development

10.0 AGRI BUSINESS FINANCIALS 92-106

10.1 Project Design Assumptions

10.2 10 -Year Projected Balance Sheet

10.3 10 -Year Projected Cashflow

10.4 10 -Year Projected Revenue and Expenditure

10.5 Project Returns

11. 0 BUSINESS IMPLEMENTATION PLAN 107-110

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11.1 Activities to be carried out

11.2 Activity Schedule

12.0 CONCLUSION 111

APPENDIXES 112-116

APPENDIX -1 DETAILS OF INTERCROPPING

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CHAPTER ONE

EXECUTIVE SUMMARY

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EXECUTIVE SUMMARY

This summary should be read in conjunction with the full text of the feasibility report and business plan from which it was

derived.
PROJECT OVERVIEW
Proposed Business Legal Status
The legal status of business tends to play an important role in any setup; the proposed Jatropha Curcas Value Chain is assumed to
operate as a private limited company.

Project Summary
Jatropha Plant Cultivation for the Production of Biodiesel and Biomass.

Industry
Green Energy

Proposed Location
The Jatropha Curcas plant thrives in areas with abundant sunlight. Therefore, the plantation and the biodiesel production plant
designed for this process should be located in sunny regions.

Project Design Assumptions

a. The project is aims at promoting Jatropha Fruits Value Chain Development in Nigeria. The project involves plantation of 500
hectares of Jatropha fruits (Agronomy) that will guarantee constant feedstock (raw-material) for the production of Biodiesel.

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The projection covers a 10-year period for the agronomy. The Jatropha fruits harvest for years 2 to 4 in the projection will be
sold as fruits to fruit vendors; this is because the quantity to be harvested would not be sufficient to meet the quantity
required for commencing Biodiesel production.

b. The Biodiesel production capacity is based on 20 metric tonnes of Jatropha fruits per day. The production will commence in
the fifth year of the Jatropha plantation to guarantee steady feedstock (raw-material) for the production.

The financial projection for the Bio-refinery covers a 6-year period, starting from the fifth year of the Jatropha Curcas
plantation.

Human Resources:

Agronomy 42 Direct Personnel


Bio-Refinery 67 Direct Personnel
Total 109

Market Demand

a. Local Demand: There is not much local demand for refined bio-diesel in Nigeria. NNPC is supposed to be the single
off-taker to blend with fossil diesel. However, there are local demands by established companies to power their
generators. These are not in commercial quantities.

b. Global Demand: The developed countries have issued policies to regulate gradual conversion from total fossil diesel
to biodiesel. This has created a lot of demand for biodiesel globally.

Most countries particularly USA and European countries have constraints in the production of feedstock for their
refineries. They have all shifted focus to Africa where there is abundant uncultivated land. The introduction of
Jatropha Curcas has also ease out the Food vs Energy debate.

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Production Programme

This is based on the capacity of the proposed Machines & Equipment is shown below;

Production at full capacity 100%


Shift per day 2
Hours per shift 8
Production days per annum 300
Production Volume of Jatropha fruits per day (tons) 20
Production Volume of Jatropha fruits per year (tons) 6,000
Production Volume Biodiesel per annum (tons) 1,742
Production Volume of Glycerine per annum (tons) 194

Biodiesel Production Capacity Utilization

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6


Capacity Utilization in percentage (%) 80 100 100 100 100 100

Expected Annual Output (M'tons)


Biodiesel 1394 1742 1742 1742 1742 1742
Glycerin 155 194 194 194 194 194
Biomass 2795 3493 3493 3493 3493 3493

Financials

Project Cost (Agronomy) N’000


Assets
Land Lease 25,000
Capital Equipment 75,000
Construction Work 25,000

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Preliminary Expenses 10,000
135,000
Operations
Soil Survey, Analysis & Planning 15,000
Land Clearing And Preparation 29,475
Cost Of Seedlings (Nursery) 55,000
Post Nursery Operation 4,500
103,975
Working Capital 11,025

TOTAL 250,000

The set-up cost which is estimated at N250million is to be financed as follows;

N'000
Equity Contribution 50,000
Loan 200,000
250,000

The Loan of N200million is repayable over a period of 5 years beginning from year 2.

Project Cost (Bio-Refinery)


Fixed Assets N'000
Land and Building 68,000
Plant & Equipment 22,919
Generators 10,000
Other Depreciable Assets 90,000
Other Facilities 17,000
Pre-Operational Expenses 25,000
Working Capital 67,081
Total 300,000

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The estimated project cost is N300million. It is to be financed as follows;

N'000
Equity Contribution 100,000
Loan 200,000
300,000

The loan is projected to be repaid in 5 years with an interest rate of 9% per annum.

Other Projected Returns Agronomy Bio-Refinery


Internal Rate of Return (IRR) 58% 16.8%
Returns On Investments 233% 125%
The project discounted payback period is 3 years and 2 months 4 years 8 months

Business Implementation Plan (Bio-Refinery)

The Business Plan is prepared to highlight the activity required for the project implementation and schedule of the activities to the
commissioning of the project.

The planning and execution of the activities is assumed to take a period of 24 months (Two year). The period is classified as year zero

(0) in the financial forecast.

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ACTIVITY SCHEDULE

ACTIVITIES MONTHS
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Organising a formidable Board
1 of Directors

Raising of Initial Equity Capital/


2 Sourcing for Loan

Commissioning of Architect and


3 other Engineering Consultants

4 Building Constructions

Engineering Procurement
5 Contract

6 Recruitment of Key Personnel

Purchase of Machinery and


7 Equipment

Arrival and installation of


8 Machinery and Equipment

Procurement of Initial Raw-


9 materials & Plant Test-Run

10 Plant Commissioning

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CHAPTER TWO

PROJECT BACKGROUND AND OVERVIEW

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2.1 INTRODUCTION

Biodiesel development in Nigeria over the years has been given little attention because of the myriads of economic strain and stress
facing the country like any other third world country. Biodiesel is a renewable source of energy that has not been fully tapped.
Biodiesel can facilitate clean air, readily usable in existing engines and transport facilities, capable of generating employment and
income for citizens and country at large. The major biomass worldwide is Jathropha plant, which is currently generating interest in
every economy of the world including Nigeria.

Jathropha curcas Linnaeus is a shrub tree that grows in all part of Nigeria with little or no maintenance. Jathropha curcas L is the only
plant which pairs a high yield of extractable oil from its seed to a relative low price for the raw oil. Jatropha plant has longevity of
40-50 years, and it does not require a fertile land to germinate.

JATROPHA curcas L. is a multipurpose species with many attributes and considerable potential. The plant is traditionally used for
medicinal purposes, but is also useful for the prevention and control of soil erosion, as living fence, and also a source of oil that can
be converted into biodiesel. The plant is widely seen to have potential to help combat the greenhouse effect, create additional
income for the rural poor, and provide a major source of renewable energy both locally and internationally. The oil from its seeds is
the most valuable product since it can be converted into biodiesel.

Biodiesel has become more attractive as an alternative to fossil diesel because of its environmental benefits and the fact that it is
made from renewable resources.

Jathropha. curcas L. is a promising source of biodiesel since its seeds contain high amount of oil and the species has good agronomic
traits. These properties of Jathropha curcas L. have attracted a lot of projects developers. At present, many countries including Nigeria
have started cultivating Jatropha trees on large scale..

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The technique to covert vegetable oil to biodiesel has been developed particularly for edible oils like rapeseed, soybean, sunflower,
canola etc. Of the several methods available for producing biodiesel, transesterification of vegetable oils is currently the method of
choice. The production of biodiesel by transesterification process employing alkali catalyst has been industrially accepted for its high
conversion and reaction rates.

This biotechnological approach is environmentally friendly since the unrecovered enzyme can degrade naturally in the environment
and also because of the mild conditions under which it is operated. But the cost of enzyme remains a barrier for its industrial
implementation and many efforts are being carried out to improve the cost effectiveness of the process. The fuel properties of
Jathropha biodiesel are comparable to those of fossil diesel and conform to the American and European standards.

A diesel engine can perform satisfactorily on biodiesel blends without any major engine hardware modifications.

2.2 DESCRIPTION OF JATHROPHA VALUE CHAIN

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2.3 PROJECT CONCEPT:

 The project intrinsically links the Agricultural Sector to the Oil & Gas industry and will exploit its multiplier effect to drive
economic growth of the Nation.

 The basic raw material for the Bio-Diesel industry is feedstock from various vegetable oils and animal fats, which are readily
available in Nigeria. This study however is based on the use of Jathropha Curcas plant for the project. Studies confirmed that
the Nation’s Agricultural sector has the capacity to energise mass production of this basic raw material.

 The plantation will be located in North Western part of Nigeria. This is because communities in that area have climatic
conditions that have optimal biophysical environment for Jathropha Curcas. L

 Farmers in these areas are already actively involved in the production of similar vegetable oils. The Investor will only need to
enhance their capacity and organise these growers into cooperative social model

 The project is conceived as environmentally sustainable and will provide a substantial income to thousands of
farmers/workers.

 Demand for Carbon Emission Reduction Credit (CERs) will be earned under the Clean Development Mechanism (CDM).

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CHAPTER THREE

JATHROPHA CURCAS L. PLANTATION

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3.0. JATHROPHA CURCAS L. PLANTATION

3.1 ADVANTAGES / DISADVANTAGES OF

Good agronomic traits

1. Hardy shrub that grows in semi-arid conditions and poor soils

2. Can be intercropped with high value crops such as sugarcane, coconut palm, various fruits and vegetables, providing
protection from grazing livestock and phyto-protection action against pests and pathogens

3. It is easy to establish and grows relatively quickly.

4. Yields around 4m/t of seed per hectare in unkempt hedges

5. Has low nutrient requirements

6. Requires low labour inputs

Multi-Purpose Plant

1. Protective hedges around fields

2. Reclaims marginal soils

3. Non-edible and therefore does not compete with food supply when used for biodiesel production

4. Is energy crop that produce seeds with high oil yields

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The Disadvantages of Jatropha

1. Seeds and leaves are toxic to human beings and animals

2. Toxicity is based on several components that make complete detoxification a complicated and difficult process.

3. Competes with food production for land use

3.2 FOOD vs ENERGY DEBATE

Food vs Energy debate in the developed world is widely misleading and potentially dangerous for developing countries and
completely unnecessary. The developed world is limited in terms of land available for cultivation so the issue of what to grow on the
land is a subject of debate.

In Africa, and Nigeria in particular, we need both food and energy from agriculture to prosper economically, to improve local
nutrition and health, and to successfully reduce and finally eliminate poverty.

In Nigeria Jathropha projects tend to contribute to securing food supply by rehabilitating unused, often degraded, land, combined
with Intercropping with food crops where suitable.

It facilitates transfer of knowhow on good agricultural practices, and access to markets for small farm holders.

A Bio-based economy is a new concept for the Nigerian Agro industry that can form the basis for an unprecedented economic boom
and lasting prosperity.

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3.3 CHARACTERISTICS OF JATHROPHA CURCAS

Distribution and Habitat

It is still uncertain where the centre of origin is, but it is believed to be Mexico and Central America. It has been introduced to Africa
and Asia and is now cultivated worldwide. This highly drought-resistant species is adapted to arid and semi-arid conditions. The
current distribution shows that introduction has been most successful in the drier regions of the tropics with annual rainfall of 300-
1000 mm. It occurs mainly at lower altitudes (0-500 m) in areas with average annual temperatures well above 20°C but can grow at
higher altitudes and tolerates slight frost.

It grows on well-drained soils with good aeration and is well adapted to marginal soils with low nutrient content.

Botanical Features of Jathropha curcas

It is a small tree or shrub with smooth grey bark, which exudes whitish colored, watery, latex when cut. Normally, it grows between
three and five meters in height, but can attain a height of up to eight or ten meters under favourable conditions.

Leaves

It has large green to pale-green leaves, alternate to sub-opposite, three-to five-lobed with a spiral phyllotaxis.

Flowers

The petiole length ranges between 6-23 mm. The inflorescence is formed in the leaf axil. Flowers are formed terminally, individually,
with female flowers usually slightly larger and occur in the hot seasons. In conditions where continuous growth occurs, an unbalance
of pistillate or staminate flower production results in a higher number of female flowers.

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Fruits

Fruits are produced in harmattan when the shrub is leafless, or it may produce several crops during the year if soil moisture is good
and temperatures are sufficiently high. Each inflorescence yields a bunch of approximately 10 or more ovoid fruits. A three, bi-valved
cocci is formed after the seeds mature and the fleshy exocarp dries.

Seeds

The seeds become mature when the capsule changes from green to yellow, after two to four months

Flowering and fruiting habit

The trees are deciduous, shedding the leaves in the dry season. Flowering occurs during the wet season and two flowering peaks are
often seen.

In permanently humid regions, flowering occurs throughout the year. The seeds mature about three months after flowering. 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 flowers are pollinated by insects especially honey bees.

Ecological Requirements

Jathropha curcas grows almost anywhere, even on gravelly, sandy and saline soils. It can thrive on the poorest stony soil. It can grow
even in the crevices of rocks. The leaves shed during the winter months around the base of the plant. The organic matter from shed
leaves enhances earthworm activity in the soil around the root-zone of the plants, which improves the fertility of the soil. Regarding
climate, Jathropha curcas is found in the tropics and subtropics and likes heat, although it does well even in lower temperatures and
can withstand a light frost. Its water requirement is extremely low and it can stand long periods of drought by shedding most of its
leaves to reduce transpiration loss. Jathropha is also suitable for preventing soil erosion and shifting of sand dunes.

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Biophysical Limits

Altitude: 0-500 m, Mean annual temperature: 20-28oC, Mean annual rainfall: 300-1000 mm or more.

Soil type: Grows on well-drained soils with good aeration and is well adapted to marginal soils with low nutrient content. On heavy
soils, root formation is reduced. Jathropha is a highly adaptable species, but its strength as a crop comes from its ability to grow on
very poor and dry sites.

3.4 CULTIVATION TECHNOLOGY

The Productive Plantation of Jatropha Curcas

The cultivation technology to be used for the project will include all modern agricultural practices being undertaken universally.
There will also be collaboration and cooperation with international agricultural organisations for an improved crop yield through
effective management practices.

The key factors that can influence the oil yield of Jathropha Curcas are:

Climate
Quality of the soil
Irrigation
Weeding
Use of fertilizer
Crop density
Genotype
Crop Yield

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Use of pesticide
 Inter-cropping
Climate

Jathropha curcas plant can withstand severe heat and does well in very warm areas. It can also withstand light frost but not for
prolonged periods. The older tree have the capacity to withstand frost more than the younger ones but black frost will almost
certainly kill young plants and severely damage older plants.

Quality of the Soil

Jathropha Curcas thrives best in sandy well-drained soils and grows. Using organic fertilizer has been proven to enhance its
yield.

Irrigation

The plant handles dryness very well and it is possible to live almost entirely off humidity in the air. 500 - 600 mm of rainfall is the
limit. Below it the production depends on the local water condition in the ground. It will also stand for long periods without
water - up to 2 years – and grows again when rains occur again.

Weeding

Standard cultural practices are timely weeding (4 times a year), proper fertilization, surface ploughing and pruning. With these
management practices a yield around 15-20 kg of fruit per tree can be obtained even if the plants did not reach full maturity.

Use of fertilizer

Although Jathropha is adapted to low fertility sites and alkaline soils, better yields seem to be obtained on poor quality soils if
fertilizers containing small amounts of calcium, magnesium, and Sulphur are used.

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Crop Density

The recommended spacing for hedge rows or soil conservation is 15cm - 25cm x 15cm-25cm in one or two rows respectively
and 2m x 1.5m to 3m x 3mm for plantations. Thus there will be between 4,000 to 6,700 plants per km for a single hedgerow and
double that when two rows are planted.

Satisfactory planting widths are 2m x 2 m, 2.5m x 2.5 m, and 3 x 3 m. This is equivalent to crop densities of 2500, 1600 and 1111
plants/ha, respectively. This study is recommending planting width of 3mX3m.

This planting width will allow a good intercropping with a maximum economic yield.

Pruning

The plants need to produce side shoots for maximum sprouting and maximum flowers and seed. First pruning is done between
90 and 120 days at 25 cm to produce eight (8) to twelve branches. In order to facilitate harvesting, it is suggested to keep the
tree less than 2 meters.

Germplasm Management

Seeds are oily and do not store for long. Seeds older than 15 months show viability below 50%. High levels of viability and low
levels of germination shortly after harvest indicate innate (primary) dormancy. Seed production ranges from about 2 tons per
hectare per year to over 12.5t/ha/year, after five years of growth.

Crop Yield

Yield is a function of water, nutrients, heat, the age of the plant and other factors relating to good management. Many different
methods of establishment, farming and harvesting are possible. The focus will be on the right mix of Cost, Quality and yield per
Metric tonne.

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Processing and Handling

After collection, the fruits are transported in open bags to the processing site where they are dried until all the fruits have
opened. It has been reported that direct sun has a negative effect on seed viability and that seeds should be dried in a shade.
When the seeds are dry they are separated from the fruits and cleaned.

Storage and Viability

The seeds are orthodox and should be dried to low moisture content (5-7%) and stored in airtight containers. At room
temperature the seeds can retain high viability for at least one year. However, because of the high oil content, the seeds are not
expected to store for as long as most orthodox species.

Dormancy and Pre-treatment

Freshly harvested seeds show dormancy and after-ripening is necessary before the seeds can germinate. Dry seed will normally
germinate readily without pre-treatment. Although it speeds up germination, it is not recommended to remove the seed coat
before sowing, as there is a risk of getting abnormal seedlings.

3.5 JATHROPHA INTERCROPPING TECHNOLOGY

Depending on topography, soil profile and prevailing agro climatic conditions in an area, Jathropha can be combined with other
suitable species including the agricultural, horticultural, herbs, pastoral and/or silvicultural components to result in an ecologically
viable, economically profitable and socially acceptable agro forestry system. THIS IS KNOWN AS INTERCROPPING.

By adopting Jathropha based intercropping systems, the Investor will improve the socioeconomic conditions in rural areas by
enhancing their economic buying power. It will also improve the profitability of the Plantation on the short run.

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3.6 RISKS AND MITIGANT

The Risk categorisation chart associated with this farm project, the degree of impact and possible Mitigant is shown in the table
below:

Risk Category Description Impact Mitigant

Operational Risk This is the risk of loss from inadequate or HIGH Adoption of a cultivation technology
failed internal processes, systems or from that assures maximum input with a
external events such as weather condition corresponding maximum yield.

Political & Legal Violations, citations and fines stemming from HIGH The Investor will ensure that terms and
Risk non-compliance with regulatory and industry conditions of contracts, legal rules and
guidelines laws (or changes in law), changes regulations covering the business are
in government, settlements/losses, properly understood and adhered to.
Counterparty’s unwillingness to meet its Proper legal counsel will be sought
contractual obligations, before going into any contractual
agreement

Business risk Major failures in products and business HIGH Appointment of experts in relevant
strategies areas.

Liquidity Risk Unplanned funding requirement MEDIUM A strict budget compliance as part of

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Management Control System

Fraud Risk Internal exposure associated with clear intent LOW operate a lean organisation to
by employees to defraud the organisation for minimise such occurrences
personal gain, as well as external exposure
associated with corporate espionage, money
laundering, theft, collusion, unauthorised
transactions etc

Customer Risk Risk of loss from failure to understand a LOW Proper due diligence will be conducted
customer’s risk profile including failure to before signing up with local or/and
perform an adequate Know Your Customer, overseas customers.
review of anti-money laundering and
monitoring customer bankruptcy actions.

KEY:

High Impact: An occurrence of this risk will have a significant impact on the project and may lead to non-attainment of project
objectives

Medium Impact: A manifestation of this risk will not adversely affect the project

Low Impact: This risk will have little or no impact on the project

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3.7 HUMAN RESOURCE ON AGRONOMY

Management

The management of the agronomy sector of the Company will consist of the Board of Directors and the operational management
team.

Board of Directors

The Board will be responsible for setting a strategic direction for the agronomy and formulating and approving its corporate policies.
It is recommended to have at least five directors.

Organisation & Staffing

On full commencement of operations, the agronomy will consist of 42 employees organised as follows:

Plantation Manager 1
Store Manager 1
Farm Equipment Operators 6
Technical Officers (Agric Engineers) 2
Supervisors (Agric Mechanisation) 4
Mechanics/Fitters/Other Artisans Staff 6
Finance Manager 1
Account Clerks 2
Internal Auditor 1
Audit Clerks 2
Administrative Manager 1
Secretary 1
Office Assistants 2
Security Men 8
Drivers 4
42

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CHAPTER FOUR

CLEAN DEVELOPMENT MECHANISM AND NIGERIAN BIO-FUEL POLICY

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4.1 THE CLEAN DEVELOPMENT MECHANISM (CDM)

Environmental concern about global warming and local pollution is the primary impetus for many clean, sustainable and renewable
energy technological developments in the 21st century. Global warming is the phenomenon of rising average temperatures observed
worldwide in recent years. This warming trend is generally attributed to increased emission of certain gases, known as greenhouse
gases, which include carbon dioxide; methane; nitrous oxide; water vapour; ozone and several classes of halocarbons (compounds
containing carbon in combination with fluorine, bromine, and /or chlorine). Greenhouse gases are so called because their presence in
the atmosphere does not block sunlight from the earth’s surface, but does slow the escape of heat from the earth. As a result, heat
becomes trapped as in a conventional greenhouse, and temperature becomes trapped. This is called the Green House Effect.

Global warming has the potential to cause massive ecological and human devastation. In the past, drastic, rapid climate change has
resulted in extinction for large numbers of animals and plant species. Sea levels will rise as ice caps melt inundating low-lying areas
around the world. While average temperatures will rise, extreme weather events, including winter storms and extreme cold, are
expected to increase in frequency; some areas will experience more flooding, while other areas will suffer drought and desertification,
straining the remaining agricultural land. Changing climate may permit tropical diseases such as malaria to invade temperate zones,
including Europe and North America.

There is a strong consensus among the scientists who study climate that the global warming now observed is caused by human
activities especially the combustion of fossil fuels. When oil, gas, or coal is burned to propel mechanical engines, generate electricity,
or provide heat, the products of combustion include carbon dioxide, methane and nitrous oxide. Thus, our conventional energy
systems are in large measure responsible for the impending environmental problem (IPCC, 2001)

A solution to greenhouse effect called the Clean Development Mechanism (CDM) has been introduced. CDM is one of the Kyoto
mechanisms aimed at promoting sustainable development in developing countries as well as to help Annex I Parties (mostly
industrialized countries) achieve compliance with their Carbon Emission Reduction (CER). It allows them to invest in emission-saving

Jatropha Value Chain > Feasibility Report/Business Plan 34


projects in developing countries and gain credit for the savings achieved through the generation of Carbon Emission Credits that they
can use to contribute to compliance with part of their emission reduction targets.

The CERs will be added to Annex I Parties' assigned amounts. Growing plants, which are later processed into fuel, recycles the Carbon
dioxide released into the atmosphere when biofuel is burned. Thus, the CO2 emission of Jathropha oil can be assumed almost zero.
For this reason, a project that aims to exploit the potential of Jathropha Curcas as energy crop owns all requisites to be
eligible within the CDM

There are new and high potential opportunities to generate carbon finance in the Biodiesel sector.

The use of petrol-diesel in engines creates a significant amount of greenhouse gas emissions that can be greatly reduced by
substituting a blend of Biodiesel and petrol-diesel or using 100 percent Biodiesel. Greenhouse gas emissions can be reduced in a
number of ways through the Biodiesel production process including:

 Carbon sequestration in the plantations of trees whose seeds are used for Biodiesel production

 Substitution of Biodiesel for petrol-diesel

 Use of processed seed cake as an organic fertilizer.

Regarding Clean Development Mechanism projects, there is a great potential in the use of Jathropha curcas. Biodiesel yields 3.2 units
of fuel product energy for every unit of fossil fuel consumed while petroleum diesel yields 0.83 units.

Including revenue from carbon credits from petrol-diesel substitution and possibly carbon sequestration and nitrogen based fertilizer
substitution; Biodiesel projects become considerably financially attractive.

Jatropha Value Chain > Feasibility Report/Business Plan 35


Biodiesel production is a growing industry throughout the world. Interest in the use of the seeds of Jathropha curcas, as well as other
plants, to make the oil is rapidly expanding. CDM potential is present in a large number of countries due to the number of types of
plants from which Biodiesel can be made. The time for realizing the potential of Biodiesel in the carbon market is now.

Nigeria ratified the Kyoto protocol in 2004 and adopted along with it, the three Kyoto Mechanisms:

(a) Emissions trading

(b) Joint implementation

(c) The clean development mechanism (CDM)

The Nigeria Designated National Authority (DNA) is within the structure of the Federal Ministry of Environment

4.1.1 Approved Criteria/Sustainable Development Indices in Nigeria:

Before a letter of approval is issued to qualify for CDM, the project must satisfy the following conditions

o Lead to real and verifiable emission reduction

o Ensure investment in Nigeria as the host country

o Economy growth protection and increased income

o Enhance efficient energy development and utilization

o Bring about environmental and financial benefits – Environmental Impact Assesment becomes imperative;

o Ensure capacity enhancement for CDM processes and among others;

o Facilitate speedy process of technology transfer; and

o Result in real measurable and long- term benefits related to the mitigation of climate change.

Jatropha Value Chain > Feasibility Report/Business Plan 36


This project matches all of the above Federal Government of Nigeria Biodiesel strategy, and can be concluded that the planning and
implementation model to be consistent to the international Kyoto Protocol for CDM Mechanism in Nigeria.

KEY SUCCESS FACTORS

The key success factors for a project of this nature include:

 Funding: access to financing, subsidies and grants will minimise initial capital outlay by potential investors and facilitate project
execution

 Land Approval process: development costs are minimised when approvals are possible and easily obtained. Local, State or
National legislation and policy may not be sensitive to the differences between conventional and clean energy technologies and
as such may unfairly disadvantage clean energy projects of this nature

 Appropriate cultivation and processing methods. This will enhance the quality of oil obtained from the nuts.

 Off-take Agreements: This will guarantee a ready market for the Company’s product. The Investor should aggressively pursue
this and include it as part of its marketing strategy. This would also ensure that the crop is not in storage for too long.

 Constant availability of feedstock: Steady and stable availability of the raw material will make the project viable. This is why it is
necessary to have an Out Growers’ Scheme to control the quality and quantity of feed stock.

 Government Support: This is available in principle with the inauguration of National Bio Fuel Policy.

4.2 NIGERIAN BIO-FUEL POLICY AND INCENTIVES

Nigeria Bio- Fuel Policy came into being in August 2005. It gave directives for the development of an “Automotive Biomass
Programme” in Nigeria. NNPC (Nigerian National Petroleum Corporation) was given the mandate to create an environment for the

Jatropha Value Chain > Feasibility Report/Business Plan 37


take-off of a domestic Bio-Fuel industry that will promote the development of conversion technologies and environmentally benign
energy uses from biomass.

The Nigerian Bio-Fuel policy objective aims to gradually reduce the nation’s dependent on imported gasoline, reduce environmental
pollution, and while at the same time create a commercial viable industry that will promote economically viable investment programs
and build up more efficient and competitive business that can precipitate domestic sustainable development.

The Biodiesel programme constitutes a major and unique attempt to integrate the agricultural sector of the economy with
the downstream sector of the petroleum sector.

The use of Biodiesel in Nigeria is anticipated to make significant impact on petroleum products quality enhancement in view of the
current limitations of the fossil-based fuels that have not kept pace with the increasing demand for environmentally friendly fuel.

th
The official gazette of Nigerian Bio-Fuel Policy and Incentives was signed at Abuja on 24 July, 2007.

The key factors are;

1. Creating Market Demand for Bio-fuels by approving the blending of bio-fuels as a component of fossil-based fuels in the
country as required for all automotive use. This blend shall involve the process of upgrading fossil-based fuels.

2. Market Entry shall be through registration of bio-fuel manufacturing plants by the DPR.

3. Policy will support the emergence of an industry in which substantial portion of feedstock used by bio-fuel plants will be
produced by large-scale producers and outgrowers.

4. For more information, please get a copy of the gazette.

4.3 AMENDMENT TO NATIONAL POLICY ON BIOFUEL PRODUCTION AND DISTRIBUTION

(Posted in the dailies on November 10, 2016)

Jatropha Value Chain > Feasibility Report/Business Plan 38


A draft national policy on biofuel production and distribution is likely to be signed into law very soon. This will amend the biofuel
policy of August 2005, which was gazetted in July 2007.

The draft-amended policy proposes very mouth-watering incentives for investors willing to go into biofuel business in Nigeria.

The policy was being fine-tuned by the Nigerian National Petroleum Corporation (NNPC) and Petroleum Products Pricing and
Regulatory Agency (PPPRA). Both agencies are driving the document and have held consultations with stakeholders in the sector.

The incentives proposed in the draft document include;

 The setting up of an appropriate funding arrangement of up to $100 billion for the establishment of a Biofuels Industry
Equity Fund by the federal government.
 All registered businesses engaged in activities related to biofuels production or the production of agricultural feedstock
for the purpose of biofuels production and co-generation within the country shall be accorded pioneer status within the
provisions of the Industrial Development (income tax relief) Act.
 Biofuel companies shall be exempted from taxation, withholding tax and capital gains tax imposed under sections 78, 79,
80 and 81 of the Companies Income Tax Act in respect of interest on foreign loans, dividends, and services rendered from
outside Nigeria to biofuels companies by foreigners.
 Biofuel companies shall be exempted from the payment of customs duties, taxes and all other charges of a similar nature
like excise duties on biofuels for an initial 5 year period subject to renewal depending on prevailing circumstances.
 A preferential loan arrangement will be made available to investors in the biofuels industry to aid the development of
large-scale out-grower’s schemes and large scale integrated operation including a feedstock plantation, a plant and
within-the-gate co-located power generating plants, cattle feedlots and fruit canning.

Jatropha Value Chain > Feasibility Report/Business Plan 39


 Domestic financing of industrial production for the biofuels industry shall equally be aided through the provision of
special low interest loans to be provided by Bank of Industry (BOI), Nigerian Export Import Bank (NEXIM), commercial
banks, agricultural banks, and such other development finance institutions.
 A fund of N100 billion shall also be set aside by the Nigerian government for provision of preferential loans for
investment in biofuels refineries similar to other intervention funds for power production and aviation at a single-digit
interest rate.
Nigeria To Set Up $50 Billion Biofuel Equity Fund (08 Feb 2017, Financial Times Nigeria}

The Governor of Central Bank, Godwin Emefiele, said a vibrant domestic biofuel industry will provide alternative clean fuel for the
country, curtail the importation of fossil fuel products, and help to conserve foreign exchange.

He said that the Federal Government of Nigeria plans to set up a $50 billion biofuel industry equity fund to develop the domestic
biofuel sector, he spoke on Tuesday at a one-day capacity development workshop organized by the Petroleum Products Pricing
Regulatory Agency (PPPRA) in partnership with the Ministry of Petroleum Resources in Abuja.

Strategic Objectives

The following are strategic objectives and goals for setting up a biodiesel factory using Jatropha in Nigeria

 To enhance the economic development of the Nigerian Oil and Gas Industry.

 To boost Nigeria’s Agricultural Sector.

 To create rural wealth through job creation.

 To reduce over-dependence on fossil petroleum.

 To promote gender equity and empower women through paid work and opportunities for entrepreneurship.

Jatropha Value Chain > Feasibility Report/Business Plan 40


CHAPTER FIVE

FINANCIALS

AGRONOMY> JATROPHA CURCAS PLANTATION

Jatropha Value Chain > Feasibility Report/Business Plan 41


5.0 FINANCIALS

5.1 Project Design Assumptions

The project is aims at promoting Jatropha Fruits Value Chain Development in Nigeria. This aspect of projected financials is for the
plantation of 500 hectares of Jatropha fruits that will guarantee constant feedstock (raw-material) for the production of Biodiesel.

The projection is for a 10-year period. The Jatropha plant starts fruiting in the second year of planting and get to peak at 6 th year.
Jatropha tree has an average of 40 year’s lifespan of continuous fruiting.

The Jatropha fruits harvest for years 2 to 4 in the projection will be sold as fruits to fruit vendors; this is because the quantity to be
harvest would not be sufficient to meet the quantity required for commencing Biodiesel production.

5.1.1 Setup Costs for Establishment of 500 Hectares of Jatropha Curcas plantation

ASSETS N'000

Land Lease 25,000


Capital Equipment 75,000
Construction Work 25,000
Preliminary Expenses 10,000
135,000
OPERATIONS
Soil Survey, Analysis & Planning 15,000
Land Clearing And Preparation 29,475
Cost Of Seedlings (Nursery) 55,000
Post Nursery Operation 4,500
103,975
WORKING CAPITAL 11,025
TOTAL 250,000

Jatropha Value Chain > Feasibility Report/Business Plan 42


The set-up cost which is estimated at N250million is to be financed as follows;

N'000
Equity Contribution 50,000
Loan 200,000
250,000
The Loan of N200million is repayable over a period of 5 years beginning from year 2.

5.1.2 Details of Assets and Operations

The detail of Capital Equipment, Construction Work is as shown below;

a Capital Equipment N'000


Mf 415 Medium Sized Tractor 8,000
4tons Tipping Trailer 5,000
5 Sets Of Af -Baldan Disc Plough 5,000
5 Sets Of Sp-20 Drag Type Offset Levelling 22" -Baldan Disc Harrow 3,000
2 Sets Of Dam Scoop 1700 3,200
2 Sets Of Mechanical Weeder 12,500
2 Sets Of Transplanter 10,000
10 Sets Of motorized Knapsack Chemical Sprayers 1,200
4 Wheeled Drive (4 Doors) Toyota Hilux Jeep 2.7wti 7,000
6 Wheeled Carrier (Canter) Mitsubishi (3 Tons) 6,000
6 Wheeled Carrier (Canter) Mitsubishi (5 Tons) 3,500
2 Sets Of Fertilizers Spreaders 1,250
Fork Lift 2,500
Fire Fighting Equipment 2,000
Survey Equipment 2,655
Office Equipment And Fittings 2,195

75,000

Jatropha Value Chain > Feasibility Report/Business Plan 43


b Construction Work N'000
Farm Operation Office Complex 5,000
Irrigation Facilities 5,000
Surface Water Tank/Installation Of Deep Well Pump 5,000
Earth Roads And Culverts Within The Plantation 2,500
Open Shed/ Warehouse 5,000
22,500
Contingency 2,500
25,000

c Soil Survey, Analysis & Planning N'000


Soil Mapping And Testing 2,000
Perimeter Survey 2,000
Environmental Impact Assessment 6,000
Agric Mechanization 2,000
Agric Extension 2,000
Contour And Topographic Survey 2,000
Land Degradation Verification Assessment Report 1,500
Plant Breeders 1,500
Logistic 2,000
21,000

Jatropha Value Chain > Feasibility Report/Business Plan 44


d Land Clearing And Preparation N'000
Bush Clearing 9,000
Stumping & Initial Pulverization 4,225
Final Dressing 4,000
Application Of Fertilizer 6,000
Field Preparation Operation 6,250
29,475

N' 000
Di Bush Clearing
Hiring Of Dozer Machine For N40,000/Day To Clear 4,000
5 Hectares/Day

Cost Of Fueling Dozer Machine (Diesel) @ N200\Litre


Calculated At 50 Litres Per Hectare 5,000
9,000
Dii Stumping & Initial Pulverization

Cost Of Fueling Tractors (Diesel) @ N200\Litre


Calculated At 20 Litres Per Hectare 2,000

Cost Of Fueling Chain Saw (Petrol) @ N145\Litre


Calculated At 10 Litres Per Hectare 725

Packing/Log Extraction (Manual) 1,500


4,225
Diii Final Dressing
Cost Of Fueling Tractors (Diesel) @ N200\Litre
Calculated At 20 Litres Per Hectare 2,000

Cost Of Fueling Harrowing (Diesel) @ N200\Litre

Jatropha Value Chain > Feasibility Report/Business Plan 45


Calculated At 20 Litres Per Hectare 2,000
4,000
Div Application Of Fertilizer
Spreading -Cost Of Fueling (Diesel) @ N200\Litre
Calculated At 10 Litres Per Hectare 1,000

Cost Of Fertilizer 5,000


6,000

Dv Field Preparation Operation

Lining And Pegging (2 Labour Per Hectare @ N2,500 Per Labour) 2,500

Opening Up Of Rows (2 Labour Per Hectare @ N2,500 Per Labour) 2,500

Replacement Of Pegs ( 1 Labour Per Hectare @ N2,500 Per Labour) 1,250


6,250

e Nursery Preparation
N' 000
Seeds Acquisition/Seedlings Preparation

1,100 Seedlings Per Hectare @ N100 Per Seedlings 55,000

f Post- Nursery Operation


N'000
Cost Of Fueling For Transplanting (Diesel)
@ N200\Litre Calculated At 20 Litres Per Hectare 2,000

Hiring Of Labour- (2 Labour Per Hectare @ N2,500 Per Labour) 2,500


4,500

Jatropha Value Chain > Feasibility Report/Business Plan 46


5.2 10 Year Projected Balance Sheet

For the Establishment Of 500 Hectares Of Jatropha Curcas L.


Plantation

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Assets N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000
Lease On Land 25,000 22,500 20,000 17,500 15,000 12,500 10,000 7,500 5,000 2,500 -
Capital Equipment 75,000 60,000 45,000 30,000 15,000 - - - - - -
Construction Work 25,000 22,500 20,000 17,500 15,000 12,500 10,000 7,500 5,000 2,500 -
Operations (Amortised) 103,975 93,578 83,180 72,783 62,385 51,988 41,590 31,193 20,795 10,398 -
Preliminary Expenses 10,000 - - - - - - - - - -
238,975 198,578 168,180 137,783 107,385 76,988 61,590 46,193 30,795 15,398 -

Cash And Bank Balance 11,025 89,841 187,119 153,974 175,340 327,384 548,248 809,590 1,069,569 1,326,939 1,582,856
250,000 288,419 355,299 291,757 282,725 404,372 609,838 855,783 1,100,364 1,342,337 1,582,856

Financed By:
Equity Contribution 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000
Reserve 38,419 145,299 121,757 152,725 314,372 559,838 805,783 1,050,364 1,292,337 1,532,856
50,000 88,419 195,299 171,757 202,725 364,372 609,838 855,783 1,100,364 1,342,337 1,582,856

Bank Facility 200,000 200,000 160,000 120,000 80,000 40,000 - - - - -

250,000 288,419 355,299 291,757 282,725 404,372 609,838 855,783 1,100,364 1,342,337 1,582,856

Jatropha Value Chain > Feasibility Report/Business Plan 47


5.3 10 - Year Cashflow Projection

For the Establishment Of 500 Hectares Of Jatropha Curcas L. Plantation

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000
Inflows
Equity Contribution 50,000
Bank Facility 200,000 -
Revenue From Jatropha Yield - 63,000 94,500 157,500 315,000 393,750 393,750 393,750 393,750 393,750
Net Inflow From Intercropping
(See Appendixes) 151,273 157,763 - - - - - - - -
Total Inflows 250,000 151,273 220,763 94,500 157,500 315,000 393,750 393,750 393,750 393,750 393,750

Outflows
Lease On Land 25,000 - - -
Capital Equipment 75,000 - - - - - - - - -
Construction Work 25,000 - - - - - - - - - -
Preliminary Expenses 10,000
Operations 103,975
Cost Of Harvesting And Bagging - 10,000 15,000 25,000 50,000 62,500 62,500 62,500 62,500 62,500
Admin. And Operating 50,418 51,446 53,705 54,794 57,716 58,997 62,118 63,482 66,090 67,544
Interest On Loan 18,000 18,000 14,400 10,800 7,200 3,600 - - - -
Loan Repayment - 40,000 40,000 40,000 40,000 40,000 - - - -
Contingency Expenditure 4,040 4,040 4,540 5,540 8,040 7,790 7,790 7,790 7,790 7,790
Total Outflows 238,975 72,457 123,486 127,644 136,134 162,956 172,886 132,408 133,772 136,380 137,833

Cashflow Surplus/(Deficit) 11,025 78,816 97,278 (33,144) 21,366 152,044 220,864 261,342 259,978 257,370 255,917
Opening Cash Balance - 11,025 89,841 187,119 153,974 175,340 327,384 548,248 809,590 1,069,569 1,326,939
Closing Cash Balance 11,025 89,841 187,119 153,974 175,340 327,384 548,248 809,590 1,069,569 1,326,939 1,582,856

Jatropha Value Chain > Feasibility Report/Business Plan 48


5.4 Revenue And Expenditure Accounts
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000
Projected Revenue
Revenue From Jathropha Yield - 63,000 94,500 157,500 315,000 393,750 393,750 393,750 393,750 393,750
Net Income From Intercropping 151,273 157,763 - - -
151,273 220,763 94,500 157,500 315,000 393,750 393,750 393,750 393,750 393,750
Less Production Cost;
Amortization Of Leasehold Land 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500
Depreciation (Equipment) 15,000 15,000 15,000 15,000 15,000
Amortization Of Constructed Structures 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500
Preliminary Expenses 10,000
Amortised Operations Costs 10,398 10,398 10,398 10,398 10,398 10,398 10,398 10,398 10,398 10,398
Cost Of Harvesting And Bagging - 10,000 15,000 25,000 50,000 62,500 62,500 62,500 62,500 62,500
40,398 40,398 45,398 55,398 80,398 77,898 77,898 77,898 77,898 77,898

Gross Profit/(Loss) 110,876 180,366 49,103 102,103 234,603 315,853 315,853 315,853 315,853 315,853

Less;
Admin. And Operating Expenses 50,418 51,446 53,705 54,794 57,716 58,997 62,118 63,482 66,090 67,544
Loan Interest 18,000 18,000 14,400 10,800 7,200 3,600 - - - -
Contingency Expenditure 4,040 4,040 4,540 5,540 8,040 7,790 7,790 7,790 7,790 7,790

Total Expenditure 72,457 73,486 72,644 71,134 72,956 70,386 69,908 71,272 73,880 75,333
Net Profit/(Loss) For the Year 38,419 106,880 (23,542) 30,969 161,647 245,466 245,945 244,581 241,973 240,519
Retained Profit/(Loss) B/Fwd - 38,419 145,299 121,757 152,725 314,372 559,838 805,783 1,050,364 1,292,337
Retained Profit/(Loss) C/Fwd 38,419 145,299 121,757 152,725 314,372 559,838 805,783 1,050,364 1,292,337 1,532,856

Jatropha Value Chain > Feasibility Report/Business Plan 49


Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
5.4.1 Admin And Operating Expenses N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000
Directors' Emolument 6,000 6,000 7,200 7,200 9,000 9,000 10,800 10,800 12,000 12,000
Salaries And Wages 35,580 36,292 37,017 37,758 38,513 39,283 40,069 40,870 41,688 42,521
Telephone Expenses 500 525 551 579 608 638 670 704 739 776
Printing And Stationery 250 263 276 289 304 319 335 352 369 388
Electricity Expenses 188 197 207 217 228 239 251 264 277 291
Motor Vehicle Running Cost 2,400 2,520 2,646 2,778 2,917 3,063 3,216 3,377 3,546 3,723
Motor Vehicle Maintenance 1,200 1,260 1,323 1,389 1,459 1,532 1,608 1,689 1,773 1,862
Miscellaneous Expenses 1,800 1,890 1,985 2,084 2,188 2,297 2,412 2,533 2,659 2,792
Insurance Premium 2,500 2,500 2,500 2,500 2,500 2,625 2,756 2,894 3,039 3,191
- - 50,418 51,446 53,705 54,794 57,716 58,997 62,118 63,482 66,090 67,544
Annual
Number Of Salary Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
5.4.2 Personnel Personnel N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'001 N'002 N'003 N'004
Plantation Manager 1 7500 7,500 7,650 7,803 7,959 8,118 8,281 8,446 8,615 8,787 8,963
Store Manager 1 1200 1,200 1,224 1,248 1,273 1,299 1,325 1,351 1,378 1,406 1,434
Farm Equipment Operators 6 540 3,240 3,305 3,371 3,438 3,507 3,577 3,649 3,722 3,796 3,872
Agric Engineers 2 1200 2,400 2,448 2,497 2,547 2,598 2,650 2,703 2,757 2,812 2,868
Supervisors (Agric Mechanization) 4 960 3,840 3,917 3,995 4,075 4,157 4,240 4,324 4,411 4,499 4,589
Mechanics & Other Artisans Staff 6 600 3,600 3,672 3,745 3,820 3,897 3,975 4,054 4,135 4,218 4,302
Finance Manager 1 1800 1,800 1,836 1,873 1,910 1,948 1,987 2,027 2,068 2,109 2,151
Account Clerks 2 720 1,440 1,469 1,498 1,528 1,559 1,590 1,622 1,654 1,687 1,721
Internal Auditor 1 1800 1,800 1,836 1,873 1,910 1,948 1,987 2,027 2,068 2,109 2,151
Audit Clerks 2 720 1,440 1,469 1,498 1,528 1,559 1,590 1,622 1,654 1,687 1,721
Administrative Manager 1 1200 1,200 1,224 1,248 1,273 1,299 1,325 1,351 1,378 1,406 1,434
Secretary 1 720 720 734 749 764 779 795 811 827 844 860
Office Assistants 2 300 600 612 624 637 649 662 676 689 703 717
Security Men 8 360 2,880 2,938 2,996 3,056 3,117 3,180 3,243 3,308 3,374 3,442
Drivers 4 480 1,920 1,958 1,998 2,038 2,078 2,120 2,162 2,205 2,250 2,295
35,580 36,292 37,017 37,758 38,513 39,283 40,069 40,870 41,688 42,521

Jatropha Value Chain > Feasibility Report/Business Plan 50


5.4.3 PROJECTED REVENUE

Expected Fruits Yield From 500 Hectares


Plantation

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Annual Total Yield (M'tons) 0 1,000 1,500 2,500 5,000 6,250 6,250 6,250 6,250 6,250

N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000


Revenue @ $200/Metric Ton 0
Converted @ N315/$ 63,000 94,500 157,500 315,000 393,750 393,750 393,750 393,750 393,750

Cost Of Harvesting
Picking Of Fruits And Processing @
N10000/Mt 0 10,000 15,000 25,000 50,000 62,500 62,500 62,500 62,500 62,500

Price of Jatropha Fruits

The price range of Jatropha fruits in international market are between $300 and $600 per Metric/ton. We have applied $200 for this
projection.

The price of the Jatropha fruits varies depending on the variety. The price changes from one variety to another.
Correspondingly the quality and quantity of the fruits/seeds also varies thus affecting its price.

Entrepreneurs all over the world face little difficulty with popularization of Jatropha as a budding source for biofuel. This is the main
reason for the price raise of Jatropha fruits.

Jatropha Value Chain > Feasibility Report/Business Plan 51


5.4.4 Loan and Repayment Schedule
A loan of N200 million would be sourced for the 500 hectares of Jatropha curcas plantation.

Loan repayment is to commence in the second year of operation when the plant will start fruiting, with a yearly
repayment of N40million. Interest on loan is calculated at 9% per annum.
Loan Repayment Schedule
LOAN REPAYMENT BALANCE INTEREST
YEAR 9%
N'000 N'000 N'000 N'000
1 200,000 - 200,000 18,000

2 200,000 40,000 160,000 18,000

3 160,000 40,000 120,000 14,400

4 120,000 40,000 80,000 10,800

5 80,000 40,000 40,000 7,200

6 40,000 40,000 - 3,600

200,000 72,000

5.4.5 Other Notes

1. Depreciation: This is calculated at 20% annually on capital equipment.

2. Amortization: The following expenditure are amortised over a ten-year period;

a. Lease on Land

Jatropha Value Chain > Feasibility Report/Business Plan 52


b. Constructed Structure

c. Farm Operation Costs

5.5 Project Returns (Jatropha Plantation)

Internal Rate of Returns (IRR) is 58% (in ten-year period)

The project discounted payback period is 3 years and 2months

Return on Investment (ROI) is 233% in year 10

Assumptions
For calculation of IRR and net present value of the project, cost of equity has been assumed at 0%. Whereas the cost of

debt is assumed at 9% with a spread of 41%.

Please note: Planting of maize crop as intercrop plant on the Jatropha plantation in the first two years of the plantation is
incorporated in the project. No intercrop plant was included from year 2 because Jatropha plant would have formed a canopy that
will prevent direct sunrays to reach the plant grown under. However, it is recommended that plants such as cowpeas and other
legumes that grow carpet-like would be introduced. The income is significant to the project in years 1 & 2.

Details of the intercropping are included in appendixes.

Jatropha Value Chain > Feasibility Report/Business Plan 53


CHAPTER SIX

AGRI BUSINESS (PRODUCTION OF BIODIESEL PROCESS, PLANT AND MACHINERY AND FACTORY LAYOUT)

Jatropha Value Chain > Feasibility Report/Business Plan 54


6.1 PROCESSING OF JATROPHA OIL TO BIODIESEL

Biodiesel Production

Biodiesel is Methyl ester derived from biomass (any oilseed) and animal fat which is produced by a chemical process called trans-
esterification and distillation of vegetable oils and animal fats.

The production processes are:

(a) Feedstock Choice for the project; JATROPHA;

(b)Oilseed crushing, pressing and filtering;

(c) Trans-esterification;

(d)Distillation and;

(e) Storage

The major phenomenon used in the transformation or conversion of biomass into biofuel is known as trans-esterification. This is the
process of converting vegetable oil into biodiesel that involves taking a triglyceride molecule, or a complex fatty acid neutralizing the
free_ fatty acids, removing the glycerin, and creating an alcohol ester. Mixing the alcohol (usually methanol but not exclusively) into
the vegetable oil accomplish this. After the mixture has settled down, glycerin is left on the bottom and methyl esters, or diesel is left
on the top. This can then be filtered.

Vegetable oils when used as diesel fuel have the following limitations:

 High viscosity
 Poor atomization
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 Poor volatility
 Thermal cracking in diesel engines
 Poor oxidation stability
 Polymerization in combustion chamber leading to deposits
 Injection fouling by deposits
 Fuel line and filter clogging
 Polymerization of triglycerides in lube oil
Hence, modification of vegetable oils is necessary for efficient and trouble-free engine operation. One method of modifying
vegetable oils to produce diesel is to transesterify it.

6.2 TRANSESTERIFICATION PROCESS

Processing of Oil
The quality of feed vegetable oil particularly FFA content plays an important role in identifying the suitable technology. The important
factors to be considered for a biodiesel production plant include:

 Process ability of variety of vegetable oils without or minimum modifications

 Process ability of high free fatty acid (FFA) containing oils/feed-stocks

 Must be able to process raw both expelled and refined oil

 Process should be environment friendly with almost zero effluent

The selection of appropriate technology for production of biodiesel calls for careful selection of processing steps, catalyst
and downstream process integration.

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6.3 BIODIESEL PRODUCTION

Material Requirement (quantities are expressed per liter of Jathropha Oil):

 5 grams of lye (caustic soda; NaOH (> 95%) or KOH (> 85%));

 at least 220 ml of methanol (> 99%).

The Process

Dissolve the lye into the methanol. Shake or swirl until all the lye has dissolved. This may take 10 minutes. It is normal that
temperature rises. This mixture is called sodium methoxide.

 Now make sure the Jathropha Oil is in a vessel large enough (at least 150% of its volume), preferably with a valve at the bottom,
and heat it to about 60 °C, then stop heating.

Then add the methoxide mixture and make sure it is mixed well for at least 10 minutes. Leave the vessel and let the different
constituents separate by sedimentation

The glycerin will settle out at the bottom. After 8 to 24 hours the sedimentation is complete and the glycerin can be drained off.

What remains is raw biodiesel. If the reaction went well and the biodiesel is clear, it may be used straight, although its quality
may be inferior because of impurities. Water washing will remove most of these impurities.

Methods commonly used for producing biodiesel are batch and continuous processes.

In general, smaller capacity plants and variable feedstock quality warrant use of batch systems.

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Continuous systems generally lead the operation on a 24x7 basis, requiring larger capacities to justify larger staffing needs and also
requiring uniform feedstock quality.

The factors affecting the trans-esterification process are

1. Oil temp.
2. Reaction temp.
3. Ratio of alcohol to oil
4. Catalyst type & conc.
5. Intensity of mixing
6. Purity of reactants

Almost all the biodiesel is produced using the base catalyzed transesterification process, as it is the most economical one requiring
only low temperatures & pressures with 98% yield.
Biodiesel: Physical Characteristics

Properties Values
Specific gravity 0.87 to 0.89
Kinematic viscosity@ 40°C 3.7 to 5.8
Cetane number 46 to 70
Higher heating value (Btu/lb) 16,928 - 17,996
Lower heating value (Btu/lb) 15,700 - 16,735
Sulphur wt % 0.00 - 0.0024
Cloud point °C -11 to 16
Pour point °C -15 to 13
Iodine number 60 - 135

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Storage of Biodiesel

The efficient storage of biodiesel resources can provide energy security to the country. Adequate data are not available for long-term
storage of biodiesel and blends. Based on the experience, biodiesel can be stored up to a max. 6 months.

As a mild solvent, biodiesel tends to dissolve sediments normally encountered in old diesel storage tanks. Brass, teflon, lead, tin,
copper, zinc etc. oxidize biodiesel and create sediments. The existing storage facilities and infrastructure for petrol & diesel can be
used for the biodiesel with minor alterations. For biodiesel storage, shelf life and how it might break down under extreme conditions
assume importance. The following merit attention for storage of biodiesel:

 Biodiesel has poor oxidation stability. Use of oxidation stability additives is necessary to address this problem.

 Low temperature can cause biodiesel to gel, but on warming it liquefies quickly. Hence, insulation/jacketing of storage tanks
and pipelines would need to be done at the low temperature zones.

 To avoid oxidation and sedimentation of tanks with biodiesel, storage tanks made of aluminium, steel etc. are recommended
for usage.

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6.4.1 Typical Jatropha Based Biodiesel Project: Processing Pathway

JATROPHA PELLETISING
FRUITS MACHINES

JATROPHA
SHELLING
SHELL
MACHINE

Jatropha Seed

DECORTICATI JATROPHA PELLETS


CO-
SOLID BIOFUEL
ONS’ HUSK GENERATIO
MACHINE
Jatropha
Kernel
EXTRACTION
JATROPHA SEED
MACHINE
CAKE

BIO-CRUDE ELECTRICITY

BIOREFINERY

BIO=REFINERY

BIODIESEL- BLENDING
CRUDE
FACILITY

GLYCERIN

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Biodiesel Production Plant Components – Chemical Process

A biodiesel production plant includes the following major components:

 Seed storage
 Oil extraction
 Catalytic conversion to biodiesel
 By-product processing
 Process and plant support systems

Various seeds, beans, or algae are the source of the oils. These crops are delivered to the facility and stored on-site in silos or
warehouses. The oil is extracted from the biomass source via chemical or mechanical processes. The fat or oil is combined with an
alcohol such as methanol in the presence of a catalyst in a reactor. This reaction occurs at low temperatures (room temperature to
about 140 degrees F) and low pressure and produces a crude biodiesel and glycerin. Once the reaction is complete, the glycerin,
which is denser, is drawn off the bottom of the settling vessel. Next, the excess alcohol is removed from the biodiesel and from the
glycerin and recovered by distillation. The biodiesel is further purified to remove residual catalysts and other contaminants and then
dried. The biodiesel and glycerin are then pumped to storage tanks.
Additional processing equipment is necessary to produce the biodiesel. A boiler provides steam for cooking, distillation, evaporation,
and other plant uses. A stack is required for the exhaust gas stream. Pollution control equipment (see Biomass Power Plant
discussion) would be required, as well as cooling towers to cool plant process water.

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5.4.2 PROCESSING MACHINES AND PATHWAY

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6.5 Machines and Equipment

1. FR-400 full-automatic Jatropha seeds shelling machine

model outsize(mm) votage(V) power(kw) Strip net rate weight(kg) production capacity(kg/h)
FR3000 2150×1560×2250 380 11 ≥98% 1200 3000

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Description:

1. This machine is made of pull out the poles, below screen, upside cover shell, into hopper, fan, drop hopper, mechanical
and electrical rack.

2, Power after starting, the spindle drive the parallel bars clicked under screen and amid the peanut shells rub them and
strip off, then the below screen hole squeeze out the peanut and the shell, finally sorting out the shell and the kernel by
the fan.

Characteristic:

Simple structure, convenient operation, low power consumption and low noises are all the features of the machine. It can
separate peanut shells and kernel one time, clean and high efficiency.

2. Jatropha Seed Decorticator With Grader Model 10 HP


Unit Price in USD

Description Qty. (With 3 phase


Electric Motor)

K10-JSD-Standard-WGM : 10
H.P. Jatropha Seed Decorticator
1 USD 2,300
with Grader Model (3 Phase)
having Size - 48’’ and Capacity:
1,000 – 1,100 Kg/hr

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Jatropha Seed Decorticator With Grader Model 10 HP

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3. Jatropha Oil Extracting Machine

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Specification performance and main technical parameters:

Model 6YL-130A
Output 8-11 tons/24h
Power 18.5kw (Motor included)
Dimension 2350*840*1850mm
Packing for motor 350*700*570mm

Product Description

1.6YL-120A
series is a new kind of optimized automatic oil press based on all advantages of 6YL series ones, increased vacuum filter d
evice, chamber, automatic heating device and control system

2. The machine is characteristics with fine figure, compact structure, easy installment, high automation, rapid heating for c
hamber, pressing at random, high output rate, clear oil and pure flavor and so on.

3.This oil mill could extract vegetable oil from many kinds of oil seeds, such as soybean, rape seeds, peanuts, coconut, sesa
me, etc.

4. The automatic oil press has three parts: Screw oil press; Electrical control box for preheating chamber, vacuum filter for c
leaning oil.

5. All the above three parts work at one time, so only one machine could the user get high quality edible oil.

6. This automatic oil press match P L C display for automatically controlling for seedfeeding, oil flowing, chamber heating,
etc. Then manpower could be saved to improve your work efficiency.

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4. Coal Powder Pellet Machine

Main technical parameters of Coal powder pellet machine


Product model LT-220 LT-290 LT-400 LT-500

Φ2-Φ30 Φ2-Φ30 Φ2-Φ30 Φ2-Φ30


Specification of partical (mm)

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Motor power(kw) 5.5-7.5 7.5-13 15-18.5 18-45

Production capacity(t/h) 0.5-1 1-2 2-3 4-5

Specifications

Coal powder pellet machine

1. CE, BV,ISO certificate


2. Different molds.
3. Modern design.
4. Since 1980s, professional

Features of Coal powder pellet machine

1. High-quality briquetting machine


2. Advanced technology briquetting machine
3. High briquetting ratio.
4. Different design according to your place.
5. The molding materials are energy saving, easy to transport
6. The final products are smokeless, non-toxic, none peculiar and environmental protection.

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The molds and finished products of Coal powder pellet machine

The product line of Coal powder pellet machine

This series Coal powder pellet making machine operation principle is: the motor drive the belt and pulley through reducer passing the
power to the driving shaft, and the driving shaft through the open gear synchronization with the driven shaft, extrusion granulation.

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5. Biodiesel Processing Plant
Biodiesel production is growing around the world and emerging markets have the most to gain from this industry.
Norway, Turkey, South Africa and Greece are a few areas of the world that have begun supplementing their petroleum
based diesel fuel needs with biodiesel which is derived from recycling used cooking oil.

Most countries around the world have natural cooking oils that they may use for the production of biodiesel. For example
India has used oil from the Honge tree nuts for years and in Europe they have had access to Camelina seeds and in Africa
and Asia they have access to the palm tree nuts that produces palm oil for cooking.

No matter what feedstock you choose, whether it is derived from the agricultural industry or from recycled used cooking
oil, biodiesel production is a viable business in any country. Versatility of production is the key for entrepreneurial and
governmental success within this industry for emerging markets, expensive large biodiesel processing plants are no longer
required to get started. The name of the game is to co-locate your biodiesel plant next to your feedstock with the help of
modular biodiesel processing plants.

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Manufacturers of containerized modular biodiesel production units are the right choice for these new emerging markets
as they provide a building for the equipment and it has the ability to be moved easily. These units are smaller and can be
scaled up to various sizes when needed, they are less of an investment than a larger fixed location facility, and capable of
running multiple vegetable oil feedstock right out of the box.

The fundamentals of modular production units are universal. Each unit is built at a manufacturing facility before being
skid-mounted and delivered to its destination. Most, containerized units range in capacity from 1million litres to more
than 8.5 million litres of production capability per year. These plants are also scalable with the ability to be linked together
to increase overall biodiesel production capacity as needed. Modular Biodiesel Processing Plants are a great choice
especially if you need to reduce the logistical cost for transportation of your oil to your production plant.

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CHAPTER SEVEN

MARKETING

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7.0 MARKETING

Today, public concern about the environment, climate change and limited fossil fuel resources are important drivers for governments,
companies and scientists to find alternatives to crude oil.

7.1 LOCAL DEMAND

• Nigeria has an extremely high demand for affordable fuels and steady electricity power supply

• Federal Government of Nigeria’s Biodiesel Policy mandates NNPC to blend fossil fuels i.e. Petrol & Diesel with Biodiesels
(Ethanol & Biodiesel) at a rate of 80:20 by volume which will be called E-20 for Petrol blended with Ethanol and B-20 for Diesel
blended with Biodiesel

• NNPC is also mandated by the same Biodiesel Policy to enter into “OFF-TAKE AGREEMENT” with Biodiesels Producers to
guarantee ready markets.

With the Biofuel Policy of the Federal Government of Nigeria, NNPC would be the major if not the only buyer of Biodiesel produced.
NNPC is to sign an off take agreement with established and registered Bio-diesel companies for their total production output.

Presently, NNPC has not put together facilities for blending of refined Bio-diesel. The Biofuel policy has recommended a 20% of
Biodiesel to be blended with 80% fossil diesel.

The present demand for fossil diesel in Nigeria is as shown in the tale below:

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Appendix 1: ANALYSIS OF DATA ON AGO CONSUMPTION

AGO (DIESEL) CONSUMPTION JANUARY-SEP. 2016


AND JAN - DEC 2015

2016 (JAN-SEP) 2015 (JAN-DEC)


MONTH DAILY AVERAGE TOTAL DAILY AVERAGE TOTAL
JAN 9,778,854 303,144,472 8,608,040 266,849,234
FEB 11,787,763 341,845,120 9,603,763 268,905,365
MAR 12,085,290 374,644,003 9,478,385 293,829,933
APR 13,546,735 406,402,041 7,978,276 239,348,267
MAY 11,387,443 353,010,739 8,187,508 253,812,743
JUN 11,144,551 334,336,539 9,293,229 278,796,880
JUL 10,436,592 323,534,345 8,031,664 248,981,584
AUG 11,277,655 349,607,308 8,683,963 268,278,847
SEP 10,545,157 316,354,722 7,465,700 223,971,002
OCT 9,949,648 308,439,077
NOV 9,778,207 293,346,197
DEC 9,842,244 305,109,578
TOTAL 12,716,718 3,102,879,289 8,903,185 3,249,668,707
Source: National Bureau of Statistics-Nigeria

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Appendix 2: Diesel Consumption by Sector

AGO (DIESEL) CONSUMPTION BY SECTOR - LITERS JAN-SEPT 2016

MONTH RETAIL INDUSTRIAL TOTAL DAILY AVERAGE


JAN 290,453,382 12,711,090 303,164,472 9,779,499.10
FEB 340,205,905 1,639,215 341,845,120 11,787,762.76
MAR 359,947,423 14,267,571 374,214,994 12,071,451.42
APR 403,530,020 2,872,021 406,402,041 13,546,734.70
MAY 309,086,668 43,924,071 353,010,739 11,387,443.19
JUN 314,505,192 19,864,347 334,369,539 11,145,651.30
JUL 315,138,364 8,395,981 323,534,345 10,436,591.77
AUG 299,828,493 49,778,815 349,607,308 11,277,655.10
SEP 280,739,403 35,615,319 316,354,722 10,545,157.40
OCT - -
NOV - -
DEC - -
TOTAL 2,913,434,850 189,068,430 3,102,503,280 12,715,177
SHARES % 93.91 6.09
Source: National Bureau of Statistics-Nigeria

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450,000,000
AGO CONSUMPTION BY SECTOR (LTRS), JAN-SEP 2016

400,000,000

350,000,000

300,000,000

250,000,000
RETAIL
200,000,000 INDUSTRIAL

150,000,000

100,000,000

50,000,000

-
JAN FEB MAR APR MAY JUN JUL AUG SEP

7.2 GLOBAL DEMAND

Ambitious Biodiesel support policies have recently been adopted in both the United States (with 60 billion litres of second-generation
Biodiesel by 2022) and the European Union (with 10% renewable energy in the transport sector by 2020).

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• Due to the size of the two markets and their considerable Biodiesel imports, the US and EU mandates could become an
important driver for the global development of second-generation Biodiesels, since current IEA analysis see a shortfall in
domestic production in both the US and EU that would need to be met with imports (IEA, 2009b).

• There is also a global economic transition from heavy reliance on raw materials derived from fossil oil based resources to a
Bio-based renewable raw materials resources

• A whole range of today's petrochemical products are ready to be replaced by new products made from plant oils.

• Bio-based raw materials may offer important contributions by reducing the dependence on fossil fuels and the related
environmental impacts.

• The focus is now on non-food crops with Jathropha emerging as the new Pin-Boy of renewable energy proponents.

• Contemporary trends across the world indicate a pronounced shift towards Jathropha as a more viable and sustainable
feedstock as an important raw material for these completely new emerging Bio-based industries.

7.3 PROSPECTS/BENEFITS OF BIODIESEL PRODUCTION

The prospects and Benefits of biodiesel production or development are enormous and very crucial to the swift development of the
economy of any nation. Some of these prospects/benefits include but not limited to the following:

◆ biodiesel can be used in car engines even when it is not yet refined. It can also be blended with normal diesel and used in

cars.

◆ source of foreign earnings since it can be exported as clean fuel to every part of the world. Biodiesel from sunflower, canola,

Jathropha can be used as a substitute for or as an additive to diesel fuel thus providing an alternative source of energy for

Jatropha Value Chain > Feasibility Report/Business Plan 78


diesel-powered engines. Since, it is a renewable domestically provided liquid fuel it can reduce countries’ dependence on oil
importation.

◆ it is not subject to market forces and can be readily tapped unlike petroleum products.

◆ it is reputed as the most valuable form of renewable energy that can be used directly in any existing, un-modified diesel

engine.

◆ economic growth is stimulated as it creates more market for agricultural products and stimulates rural development and

generates interest in the youth towards taking up job opportunities in agriculture and farming instead of over-dependence on
white collar job that is not always there. This is particularly important for Nigeria that is majorly agrarian or has the capacity or
potential to become one.

◆ production of biofuel can lead to development of new industries, new jobs, new markets, new technologies, etc.

◆ the foreign earnings could be channeled towards the development of other sectors of the economy especially health and

education sectors.

◆ biofuel generates fewer emissions of carbon monoxide, particulates, and toxic chemicals (that cause smog, aggravate

respiratory and heart diseases and contributes to thousands or even hundreds of thousands of premature deaths each year.)
un-like gasoline and diesel with high emissions. Studies show that biodiesel reduces carbon dioxide emission to considerable
level and can even reduce its emissions to zero. As such, the uptake of carbon from atmosphere by plants and trees reduces
the effects of global warming.

◆ biodiesel is as biodegradable as salt. _It is biodegradable as sugar, ten times less toxic than table salt. It is environmentally

friendly and ideal for heavily polluted cities like Lagos and Portharcourt.

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◆ biodiesel produces 80% less carbon dioxide and 100% less sulfur dioxide emissions, provides 90% reduction in cancer risk.

◆ it is cheaper than mineral oil diesel and capable of extending the life-span of engines; and a means of conserving natural

resources. Biodiesel can be used in standard diesel engines, but is often blended with conventional diesel.

◆ according to the International Energy Agency, biofuels have the potential to meet more than a quarter of world demand for

transportation fuels by 2050[11].

◆ biodiesel is an oxygenated fuel, meaning that it contains a reduced amount of carbon and higher hydrogen and oxygen

content than fossil fuel. This improves the combustion of biodiesel and reduces the particulate emissions from un-burnt
carbon and has high flash point of about 300F (148 C) compared to petroleum diesel fuel, which has a flash point of 125F (52
C)[12] hence, it is a better lubricant.

◆ Biodiesel produced from Jathropha_curcas (50% of the fuel) has been used in January, 2009 by continental Airlines and Air

New Zealand in December, 2008. (As such nothing stops Nigeria from following suit)

◆Jatropha plant is poisonous and can grow on arid or semi-arid soil. It also grows very tall. Hence, it can not only be grown in

desert-prone-areas of the country but can also serve as forest; and when inter-cropped with other crops like maize, beans and
pea nuts, etc is capable of regenerating the soil. As such, the production of biofuel from Jatropha can be done while other
benefits and, or revenue are being derived.

◆ Biodiesels are renewable energy and can drastically reduce greenhouse gases since its production and use is nearly carbon

neutral. It can be gotten from various sources including algae making its prospects almost limitless.

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CHAPTER EIGHT

PROPOSED PROJECT LOCATION

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8.0 PROPOSED PROJECT LOCATION

8.1 Site Design

Most biofuel production plants are located within 150 km of the resource being used as the primary process source. The Jatropha
Curcas plant thrives in areas with abundant sunlight. Therefore, the plantation and the biodiesel production plant designed for this
process should be located in sunny regions.

The proposed process makes use of solvent extraction. Because solvent extraction is a complex system that poses specific hazards,
the location of a Jatropha biodiesel plant should be a sufficient distance from residential and commercial areas.

A biodiesel production plant typically requires 5 to 10 acres for all the facilities. The total area of the site is usually larger, landscaped,
and serves as an exclusion area to the public.

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CONCEPTUAL DRAFTLAYOUTOF JATROPHA BDF PRODUCTION PLANT.
STAFF CANTEEN STAFF CLINIC

Executive Parking Lot SOLID BIO-FUEL Fire station


PRODUCTION PLANT

Power house

ADMIN BLOCK

STORAGE TANKS (CJO)


JATROPHA
OIL
STOCK YARD
EXPELLERS

Security Post
Discharge point
Way bridge

Material Storage B D F PLANT Bio-diesel Loading Bay


Storage tanks

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CHAPTER NINE

HUMAN RESOURCES

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9.1 ORGANISATIONS & STAFFING
The Company shall be organized and managed with the adoption of best corporate governance practices. The company shall be
driven by an appropriate corporate structure to propel the achievement of corporate vision and objectives, regulate the affairs of the
company, institute and enforce controls, procedures and systems.

The Proposed Organisation Structure for the Project’s Management Team

Board of Directors

Managing Director
Company Secretary

Head, Internal Audit &


Personal Assistant Assurance

GM, Refinery GM Agric. Bus.

Head, Farm

Head, Operations Head, Finance Head, Marketing Head, Admin Operations

& Sales
Account & Admin

Production HR, Manager


Treasurer
Mgr. Sales &
Workshop
Distribution
Accounts Public
Transport &
Relations,
Logistics
Manager
Manager Trade Finance
Admin,
Environmental
Manager
Health, Safety
& Quality Mgr.
Jatropha Value Chain > Feasibility Report/Business Plan 85
9.2 PROFILE, JOB DESCRIPTION AND REMUNERATION OF KEY PERSONNEL FOR BIODIESEL PRODUCTION

POSITION/STATUS QUALIFICATION RESPONSIBILITIES ANNUAL


REQUIRED REMUNERATION
N'000
1 MD/CEO MSC, BSC i. Implementation of Board decisions and policies 6,000
Plus minimum of 8 years ii. Provide administrative and direction guidelines
Industry experience iii. Ensure achievement of set objectives
iv. Management of resources to ensure achievement
of goals.
v. Liaise with government institutions and other
relevant agencies.

PRODUCTION
2 MANAGER MSC, BSC i. Coordinate the entire production processes 15,000
(EXPATRIATE) Plus minimum of 12 years ii. Ensure adherence to production standards
Industry experience iii. Supervise processing and production staff
iv. Ensure timely and efficient production
v. Ensure achievement of production targets

3 ADMIN. MANAGER MSC, BSC in Admin. i. Responsible for personnel issues 2,400
ii. Handle staff recruitment, transfers,
Plus minimum of 5 years disengagement and other related matters.
Administrative experience
iii. Handle staff performance appraisal and
promotions
iv. Handle staff welfares and liaise with labour union

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BSC Accounting with
4 ACCOUNT MANAGER ICAN/ACCA i. In-charge of finance and accounts 2,400
Plus minimum of 5 years ii. Prepare weekly, monthly, and yearly accounting
Accounting experience reports.
iii. Responsible for general accounting and book
keeping.
iv. Handle income and expenditure reconciliation

BSC Accounting with


5 AUDIT MANAGER ICAN/ACCA i. Ensure compliance with company's controls and 2,400
Plus minimum of 5 years policies.
ii. Provide independent assurance that an
Internal audit experience organisation's risk management, governance
and internal control processes are operating
effectively.
iii. Provide regular evaluation and appraisals of
Internal control.

MARKETING
6 MANAGER Msc, Bsc in Marketing i. Develop new business relationship and enrich 2,400
Plus minimum of 5 years existing ones.
Marketing experience ii. Drive and promote sales and marketing target.
iii. Supervise the marketing department.
iv. Products and Price survey
v. Monitor Sales
vi. Prepares daily and weekly sales report
vii. Follow up customers and ensure realization of
sales proceeds.

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9.3 STAFF TRAINING AND DEVELOPMENT POLICY

STAFF PERFORMANCE DEVELOPMENT

9.3.1. Purpose

The company’s Staff Performance Development Process is aimed at

 Driving the company to become a high performance and commercially focused organization

 Aligning individual objectives with company’s objectives and core values.

 Encouraging employees to think about and communicate their performance objectives/targets with their supervisors

 Focusing on performance improvement

 Helping staff to continue self value-adding

 Tracking and rewarding high performers

9.3.2. Performance Development Process

 Performance Development is a systematic approach to maximizing both individual and organizational performance.

 Performance is defined as a combination of Results (Achievement of Objectives) plus Behaviours (Competency


Development).

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9.3.2.1. Achievement of Objectives

o The company shall adopt a “cascading objectives” system. This system links individual objectives to department

objectives. In turn, department objectives are linked to company’s strategic objectives.

o By linking individual performance to company’s strategic objectives, the company ensures that:

i) Individuals at all levels of the organization will work towards achieving company’s objectives and financial success

ii) Managers effectively communicate division/department objectives to employees

iii) Employees learn how to set their performance objectives in direct support of division/department objectives

iv) The performance development schedule is aligned with the company’s strategic planning and budgeting schedule

9.3.2.2 Competency Development

 Competencies are observable and applied knowledge, skills and behaviours important for the success of the organization,
personal performance and enhanced contribution.

 The company’s Competency Model is directly linked to its core values and vision/mission.

 By linking competencies to the company’s core values, this ensures that employees are focused on the “right” behaviours.

9.3.2.3. Key Phases of the Performance Development Process

 The company follows four phases to achieving performance development success:

i) Planning- Setting organization- wide, division/ department-specific and individual objectives

Jatropha Value Chain > Feasibility Report/Business Plan 89


ii) Leading- On-going coaching and feedback to employees about their performance

iii) Reviewing- Determining rewards and incentives

iv) Rewarding- Assessing performance for the year with individual appraisal interviews between employees and their
appraisers.

Through these phases, the company follows a systematic, scheduled approach, from setting overall corporate objectives at the

beginning of the year to rewarding employees at the end of the year.

9.4 TRAINING & DEVELOPMENT

9.4.1 Purpose

The main objective of training and development is to help develop key competencies that enable individuals to perform

current or future jobs successfully.

In this regard, all training and development programs organized by the Human Resources Department will be geared towards
the following objectives:

• Strengthening the job skills/knowledge of employees;

• Improving operational efficiency and productivity; and or

• Developing the potential of employees for maximizing mutual benefit to individuals and the company

9.4.2 Policy

Jatropha Value Chain > Feasibility Report/Business Plan 90


The basic policy in administering and implementing any type of training or development is in accordance with the strategic
business objectives of the company. The Human Resources Department will work closely with Heads of Division/Department
in assessing areas that need training and development support.

9.4.3 Types of Training/Development Activities


3.1. Staff training/development activities can be employer-or employee-initiated. In either case, has to be approved by the
manager in charge of the department or above with additional endorsement from the Human Resources Department
or the Chief Executive.

3.2. Employee-initiated training/development activities may include external programs that are organized by external
training institutes or by the company.

3.3. Employer-initiated programs may take the form of offering sponsorship for employees to attend external programs or

organizing such programs in-house.

3.4. Depending on the nature of needs and operational requirements, training/development programs may also be
implemented as job induction, job rotation, on-the-job coaching, counseling, individual or group projects, and
secondment.

Jatropha Value Chain > Feasibility Report/Business Plan 91


CHAPTER TEN

FINANCIALS

AGRI BUSINESS> PRODUCTION OF BIO-DIESEL AND BIOMASS

Jatropha Value Chain > Feasibility Report/Business Plan 92


10.1 Project Design Assumptions

The project is aims at promoting Jatropha Fruits Value Chain Development in Nigeria. This aspect of projected financials is for the
production of Biodiesel and Biomass from Jatropha fruits.

The feedstock (Jatropha Fruits) for the production will be supplied from the 500 hectares of the Jatropha Curcas plantation. The
biodiesel and biomass production would commence in the fifth year of the Jatropha plantation to guarantee steady feedstock (raw-
material) for the production.

This financial projection covers a 6-year period, starting from the fifth year of the Jatropha Curcas plantation.

10.1.1 Project Set up Cost

The estimated project cost is N300million. It is to be financed as follows;

N'000
Equity Contribution 100,000
Loan 200,000
300,000
Break-down of project cost is as follows;
N'000 N'000
Land and Buildings
Cost of Land 8,000
Construction of Plant and Other Buildings 60,000
68,000
Plant and Machinery
Shelling Machine 1,250
Decorticating Machine 725
Extracting Machine 945
Pelletizing Machine 1,260
Modular Bio-Refinery 15,750

Jatropha Value Chain > Feasibility Report/Business Plan 93


Accessories & Installation Cost 2,989
22,919
Generators
Bio-diesel Generator 10,000
10,000
Other Depreciable Assets
Pool Vehicles, Tankers and Trucks 80,000
Forklift (10 ton) 5,000
Furniture & Fittings 5,000
90,000
Other Facility
Maintenance Workshop 5,000
Fire Station and Equipment 12,000
17,000
Pre-operational Expenses
EIA and other payment 25,000

Working Capital 67,081

Total Project Cost 300,000

10.1.2 Plant, Machinery and Equipment

Details of Plant, Machinery and Equipment are as follows:

Total Total
Machinery and Equipment Capacity Number of Cost/unit Cost Cost
Units N'000 N'000 $'000

Shelling Machine 3mt/hr 1 1,250 1,250 3.97


Decorticating Machine 1mt/hr 1 725 725 2.30

Jatropha Value Chain > Feasibility Report/Business Plan 94


Extracting Machine 10mt/day 1 945 945 3.00
Pelletizing Machine 7.5mt/day 1 1,260 1,260 4.00
Modular Bio-Refinery 5mt/day 1 15,750 15,750 50.00

19,930 63
Accessories & Installation Cost & Logistics 2,989 9
22,919 73

Other Machinery
Diesel Generator 500 kva 1 10,000.00 10,000.00 31.75

Vehicles
Pool Vehicles 5 5,000 25,000 79.37
Trucks 2 7,500 15,000 47.62
Tanker 1 40,000 40,000 126.98
80,000 254

10.1.3 Production Programme

Production programme based on the capacity of the proposed M& E is shown below:

Production at full capacity 100%


Shift per day 2
Hours per shift 8
Production days per annum 300
Production Volume of Jatropha fruits per day (M’ tons) 20
Production Volume of Jatropha fruits per year (M’tons) 6,000
Production Volume Biodiesel per annum (M’tons) 1,742
Production Volume of Glycerine per annum (M’tons) 194

Jatropha Value Chain > Feasibility Report/Business Plan 95


10.1.4 Components of Jatropha Fruits

Jatropha Fruits Processing Components Annual At 100% Capacity Expected


Production Expected Output Daily Output
Jatropha Fruits (Shelling Machine) 100% 6,000 M' tons M' tons
Jatropha Shell from Jatropha Fruit 33.33% 6,000 2,000 6.67
Jatropha Kernels from Jatropha Fruit 66.67% 6,000 4,000 13.33

Jatropha Kernels (Decorticating Machine)


Jatropha Seeds from Jatropha Kernels 65.40% 4000.2 2616 8.72
Jatropha Husk from Jatropha Kernels 34.60% 4000.2 1384 4.61

Jatropha Seeds (Extracting Machine)


Bio-crude in Jatropha Seeds (Using chemical extraction method) 74% 2616 1936 6.45
Jatropha Seed Cake 26% 2616 680 2.27

Jatropha Bio-crude (Bio-Refinery)


Biodiesel contents in Jatropha Bio-crude 90% 1936 1742 5.81
Glycerin 10% 1936 194 0.65

10.1.5 Yearly Production Capacity Utilization

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6


Capacity Utilization in percentage (%) 80 100 100 100 100 100

Expected Annual Output (M'tons)


Biodiesel 1394 1742 1742 1742 1742 1742
Glycerin 155 194 194 194 194 194
Biomass (Net of 18% process loss) 2795 3493 3493 3493 3493 3493

Jatropha Value Chain > Feasibility Report/Business Plan 96


10.1.6 Material and Operating Costs

1) Raw Material Costs


Jatropha fruits and chemicals are the main raw materials for the production. The annual raw-material requirement and raw
material cost estimate is as shown;

i Jatropha Fruits Year 1 Year 2 Year 3 Year 4 Year 5 Year 6


Jatropha Fruits required (M'tons) 4,800 6,000 6,000 6,000 6,000 6,000
Cost per M’ton (N'000) 67 67 67 67 67 67

Annual Total Costs (N'000) 321,600 402,000 402,000 402,000 402,000 402,000

Chemical Costs @ 3% 9,648 12,060 12,060 12,060 12,060 12,060


331,248 414,060 414,060 414,060 414,060 414,060
Provision for wastages at 2% 6,625 8,281 8,281 8,281 8,281 8,281
Total Material Costs 337,873 422,341 422,341 422,341 422,341 422,341

Please note that the price per M’ton from the Jatropha plantation is N63,000:00, the N4,000 mark-up per M’ton is for logistics to
biodiesel production plant.

2. Utility Costs
The major item of utility is energy to power the machines. The annual requirement and cost estimates is shown below;
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Electricity in kwh per year 96,000 120,000 120,000 120,000 120,000 120,000
Cost per Kwh (N) 40 40 40 40 40 40
Cost per annum (N'000) 3,840 4,800 4,800 4,800 4,800 4,800

Total Costs of Utilities (N'000) 3,840 4,800 4,800 4,800 4,800 4,800

Jatropha Value Chain > Feasibility Report/Business Plan 97


3. Manpower Costs
The services of both skilled and unskilled personnel are required. The cost is classified into direct manpower production costs and
other personnel costs. Salary and Wages increase of 2 % annually is projected.

Provision is also made for hiring an expatriate for the production process.

Operators for Machines & Plant Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Shelling Machine 6 6 6 6 6 6
Decorticating Machine 6 6 6 6 6 6
Extracting Machine 6 6 6 6 6 6
Pelletizing Machine 6 6 6 6 6 6
Bio-Refinery Plant 6 6 6 6 6 6
30 30 30 30 30 30

Man power Requirement and Cost Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Production Personnel
Production Manager (Expatriate) 1 1 1 1 1 1
Production Supervisor 2 2 2 2 2 2
Quality Control officers/Lab attendants 2 2 2 2 2 2
Production Assistant / Operators 30 30 30 30 30 30
Factory Hands 8 8 8 8 8 8
43 43 43 43 43 43

Average Annual Salary Per Person N'000 N'000 N'000 N'000 N'000 N'000
Production Manager (Expatriate) 15,000 15,300 15,606 15,918 16,236 16,561
Production Supervisor 1,800 1,836 1,873 1,910 1,948 1,987
Quality Control officers/Lab attendants 960 979 999 1,019 1,039 1,060
Production Assistant/Operators 600 612 624 637 649 662
Factory Hands 360 367 375 382 390 397

Jatropha Value Chain > Feasibility Report/Business Plan 98


Total Annual Salary N'000 N'000 N'000 N'000 N'000 N'000
Production Manager 15,000 15,300 15,606 15,918 16,236 16,561
Production Supervisor 3,600 3,672 3,745 3,820 3,897 3,975
Quality Control officers/Lab attendants 1,920 1,958 1,998 2,038 2,078 2,120
Production Assistant/Operators 18,000 18,360 18,727 19,102 19,484 19,873
Factory Hands 2,880 2,938 2,996 3,056 3,117 3,180

Total Production Manpower Costs 41,400 42,228 43,073 43,934 44,813 45,709

Other Personnel Costs Number of Annual Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Personnel Salary Total Total Total Total Total Total
N'000 N'000 N'000 N'000 N'000 N'000 N'000
Managing Director 1 6,000 6,000 6,120 6,242 6,367 6,495 6,624
Head of Finance & Accounts 1 2,400 2,400 2,448 2,497 2,547 2,598 2,650
Head of Marketing & sales 1 2,400 2,400 2,448 2,497 2,547 2,598 2,650
Head of Internal Audit & Assurance 1 2,400 2,400 2,448 2,497 2,547 2,598 2,650
Head of Admin and Personnel 1 2,400 2,400 2,448 2,497 2,547 2,598 2,650
Public Relations Officer 1 2,400 2,400 2,448 2,497 2,547 2,598 2,650
Sales & Distribution Officers 2 1,200 2,400 2,448 2,497 2,547 2,598 2,650
Account and Audit Clerks 4 1,200 4,800 4,896 4,994 5,094 5,196 5,300
Drivers 6 600 3,600 3,672 3,745 3,820 3,897 3,975
Security guards 8 420 3,360 3,427 3,496 3,566 3,637 3,710
Receptionist 1 960 960 979 999 1,019 1,039 1,060
Cleaners/Office assistants 2 360 720 734 749 764 779 795

24 18,240 18,605 18,977 19,356 19,744 20,138

Human Resources Year 1 Year 2 Year 3 Year 4 Year 5 Year 6


Number of Production Personnel 43 43 43 43 43 43
Number of Admin & other Personnel 24 24 24 24 24 24
Total Personnel 67 67 67 67 67 67

Jatropha Value Chain > Feasibility Report/Business Plan 99


10.1.7 Projected Revenue

The Projected revenue is categorised into three;

1. Revenue from Biodiesel Sales


2. Revenue from Glycerine
3. Revenue from Biomass
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Biodiesel output (M'tons) 1,394 1,742 1,742 1,742 1,742 1,742
Price per M'tons 180,000 180,000 180,000 180,000 180,000 180,000
Revenue (N'000) 250,897 313,622 313,622 313,622 313,622 313,622

Revenue from By-Product (Glycerin) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Glycerin contents (M'tons) 155 194 194 194 194 194
Value @ N150,000 per ton (N'000) 23,231 29,039 29,039 29,039 29,039 29,039

Revenue from Pelletizers Year 1 Year 2 Year 3 Year 4 Year 5 Year 6


Annual Jatropha fruits for production (M'tons) 4,800 6,000 6,000 6,000 6,000 6,000
(Husk, Shell & Seed Cake) contents in Jatropha fruits 3,408 4,260 4,260 4,260 4,260 4,260
Converted to solid biomass 2,795 3,493 3,493 3,493 3,493 3,493

Value @ N75,000 per ton (N'000) 209,592 261,990 261,990 261,990 261,990 261,990

Total Revenue 483,721 604,651 604,651 604,651 604,651 604,651

10.1.8 Other Assumptions

1. Inventory

The annual inventory is based on 1 month of Jatropha Fruits and 3 months for chemicals required for production.

Jatropha Value Chain > Feasibility Report/Business Plan 100


2. Annual Depreciation Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
COST DEPRECIATION N'000 N'000 N'000 N'000 N'000 N'000
Land 8,000 0.00% - - - - - -
Building 60,000 2.00% 1,200 1,200 1,200 1,200 1,200 1,200
Plant Equipment 22,919 10.00% 2,292 2,292 2,292 2,292 2,292 2,292
Generators 10,000 12.50% 1,250 1,250 1,250 1,250 1,250 1,250
Other Depreciable Assets 90,000 15.00% 13,500 13,500 13,500 13,500 13,500 13,500
Other Facility 17,000 10.00% 1,700 1,700 1,700 1,700 1,700 1,700
207,919 19,942 19,942 19,942 19,942 19,942 19,942
3 Taxation

No provision was made for taxation as the company is expected to enjoy pioneer status for five-year period of
operation.

4. Loans and Repayment Schedule


A loan of N250 million would be sourced for the acquisition of Plant and Machinery, certain equipment and
building construction as stated in the executive summary.

Loan repayment is to commence in the first year of operation with a yearly repayment of N50million. Interest on
loan is calculated at 9% per annum
Below is the loan schedule:
Loan Repayment Balance Interest
Year 9%
N'000 N'000 N'000 N'000
0 200,000 - 200,000 18,000

1 200,000 40,000 160,000 18,000

2 160,000 40,000 120,000 14,400

Jatropha Value Chain > Feasibility Report/Business Plan 101


3 120,000 40,000 80,000 10,800

4 80,000 40,000 40,000 7,200

5 40,000 40,000 - 3,600

6 - - -

200,000 68,400

Jatropha Value Chain > Feasibility Report/Business Plan 102


10.2 6 –YEAR PROJECTED BALANCE SHEET
YEAR 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Fixed Assets N'000 N'000 N'000 N'000 N'000 N'000 N'000
Land and Building 68,000 66,800 65,600 64,400 63,200 62,000 60,800
Plant & Equipment 22,919 20,627 18,335 16,043 13,751 11,459 9,168
Generators 10,000 8,750 7,500 6,250 5,000 3,750 2,500
Other Depreciable Assets 90,000 76,500 63,000 49,500 36,000 22,500 9,000
Other Facility 17,000 15,300 13,600 11,900 10,200 8,500 6,800
207,919 187,977 168,035 148,093 128,151 108,209 88,268
Pre- Operational Expenses
EIA and Other payments 25,000 - - - - - -
25,000 - - - - - -
Current Assets
Inventory 15,000 30,568 38,210 38,210 38,210 38,210 38,210
Cash and Bank Balances 52,081 30,925 51,188 78,571 105,200 130,801 195,055
67,081 61,493 89,398 116,781 143,410 169,011 233,265

Total Assets 300,000 249,470 257,433 264,874 271,561 277,221 321,533

Financed By: N'000 N'000 N'000 N'000 N'000 N'000 N'000


Equity Capital 100,000 50,000 50,000 50,000 50,000 50,000 50,000
Accumulated Profit & Loss - (10,530) 37,433 84,874 131,561 177,221 216,216
Total Equity Attributable to Owners 100,000 89,470 137,433 184,874 231,561 277,221 316,216

LONG TERM LIABILITY


Term Loan - Project Financiers 200,000 160,000 120,000 80,000 40,000 - -

CURRENT LIABILITY
Taxation - - - - - 5,317
TOTAL CAPITAL 300,000 249,470 257,433 264,874 271,561 277,221 321,533

Jatropha Value Chain > Feasibility Report/Business Plan 103


10.3 6-YEAR PROJECTED CASHFLOW STATEMENT
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
N'000 N'000 N'000 N'000 N'000 N'000 N'000
INFLOWS
Revenue from Sales 483,721 604,651 604,651 604,651 604,651 604,651
Equity Capital 100,000 - - - - -
Loan 200,000 - - - - -
TOTAL INFLOWS 300,000 483,721 604,651 604,651 604,651 604,651 604,651

OUTFLOWS
Land & Building 68,000 - - - - - -
Plant & Machinery 22,919 - - - - - -
Generators 10,000 - - - - - -
Other Depreciable Assets 90,000 - - - - - -
Other Facility 17,000
Inventory Expenses 15,000 15,568 7,642 - - - -
Pre-operational expense 25,000 - - - - - -
Raw material Costs 337,873 422,341 422,341 422,341 422,341 422,341
Other Production Overheads - 50,438 52,954 54,703 56,678 58,918 61,470
Administrative Expenses - 36,240 38,605 40,977 43,356 45,744 48,138
Financial Costs - 18,000 14,400 10,800 7,200 3,600
Contingency 6,757 8,447 8,447 8,447 8,447 8,447
Loan Repayment - 40,000 40,000 40,000 40,000 40,000
Taxation - - - - - - -
Total out 247,919 504,876 584,389 577,268 578,022 579,049 540,397

Cash Flow Surplus/(Deficit) 52,081 (21,156) 20,262 27,383 26,629 25,602 64,254
Opening Cash Balance - 52,081 30,925 51,188 78,571 105,200 130,801
Closing Cash Balance 52,081 30,925 51,188 78,571 105,200 130,801 195,055

Jatropha Value Chain > Feasibility Report/Business Plan 104


10.4 Projected Revenue and Expenditure Accounts
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Revenue Sources N'000 N'000 N'000 N'000 N'000 N'000
Revenue from Biodiesel 250,897 313,622 313,622 313,622 313,622 313,622
Revenue from Glycerine 23,231 29,039 29,039 29,039 29,039 29,039
Revenue from Biomass 209,592 261,990 261,990 261,990 261,990 261,990
483,721 604,651 604,651 604,651 604,651 604,651
Less: Production Cost / Overheads
Raw Material 337,873 422,341 422,341 422,341 422,341 422,341
Utilities (Electricity Only) 3,840 4,800 4,800 4,800 4,800 4,800
Man power Cost 41,400 42,228 43,073 43,934 44,813 45,709
Insurance Cost 1,040 936 842 758 682 614
Maintenance 4,158 4,990 5,988 7,186 8,623 10,347
Depreciation 15,954 15,954 15,954 15,954 15,954 15,954
Cost of Production 404,264 491,248 492,997 494,972 497,212 499,765

Gross Profit/(Loss) 79,456 113,402 111,653 109,679 107,439 104,886

Less: Other Costs


Pre-operational expenses 25,000
Other Personnel Cost 18,240 18,605 18,977 19,356 19,744 20,138
Administrative and General Expenses 18,000 20,000 22,000 24,000 26,000 28,000
Other Depreciation 3,988 3,988 3,988 3,988 3,988 3,988
Financial Costs 18,000 14,400 10,800 7,200 3,600
Contingency 6,757 8,447 8,447 8,447 8,447 8,447
Total Expenditure 89,986 65,440 64,212 62,992 61,779 60,574
Net Profit for the year before tax (10,530) 47,962 47,441 46,687 45,660 44,312
Taxation - - - - - (5,317)
Net Profit for the year after tax (10,530) 47,962 47,441 46,687 45,660 38,995
Retained Profit B/fwd - (10,530) 37,433 84,874 131,561 177,221
Retained Profit C/fwd (10,530) 37,433 84,874 131,561 177,221 216,216

Jatropha Value Chain > Feasibility Report/Business Plan 105


10.5 Project Returns

10.5.1 Returns

Based on cash flow projections prepared after taking into consideration project set up costs and operating results, the project is
expected to generate returns as shown below;

 Internal Rate of Returns (IRR) is 16.8% (in ten year period)


 The project discounted payback period is 4 years 8 months
 Return on Investment (ROI) is 125% in 6th year.
Assumptions
For calculation of IRR and net present value of the project cost of equity has been assumed at 0% whereas, cost of debt is

assumed at 9% with a spread of 15%.

10.5.2 Profitability

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6


N'000 N'000 N'000 N'000 N'000 N'000
Turnover 483,721 604,651 604,651 604,651 604,651 604,651
Profit before tax (10,530) 47,962 47,441 46,687 45,660 44,312
Kobo Kobo Kobo Kobo Kobo Kobo
Earnings per share -21 96 95 93 91 89
Return on Capital employed -12 35 26 20 16 14

Jatropha Value Chain > Feasibility Report/Business Plan 106


CHAPTER ELEVEN

BUSINESS IMPLEMENTATION PLAN

Jatropha Value Chain > Feasibility Report/Business Plan 107


11.0 BUSINESS IMPLEMENTATION PLAN (BUSINESS PLAN)

Jatropha Value Chain Development is a project aims to promote investments in the production of Biodiesel and Biomass from
Jatropha fruits. In an effort to achieve these, feasibility studies have been carried out to highlight the profitability inherent in this
investment and market opportunities available.

This Business Plan is prepared to highlight the activity required for the project implementation and schedule of the activities to the

commissioning of the project.

11.1 The implementation of this project can be divided into activities.

Activity I– The Promoters will raise a formidable Board of Directors to formulate policies and manage the Pre-commencement
activities.

Activity II– Raising of initial Equity Capital and sourcing for loan from reputable investors (banks or Venture Capitalist)

Activity III– Commissioning Architects and other Engineering Consultants to draw the site plans and prepare the BOQ for
Government approvals.

Activity IV– Commencement of work on Administrative Building and Factory Construction.

Activity V– Awarding Engineering Procurement Contract

Activity VI– Employment of key personnel

Activity VII– Purchase of Machinery and Equipment.

Jatropha Value Chain > Feasibility Report/Business Plan 108


Activity VIII – Arrival and Installation of Machinery and Equipment

Activity IX – Procurement of initial raw materials and Plant test-run

Activity X – Commissioning of the Plant

The execution of the activities is assumed to take a period of 24 months (Two year). The period is classified as year zero (0) in the

financial forecast.

Jatropha Value Chain > Feasibility Report/Business Plan 109


11.2 ACTIVITY SCHEDULE

ACTIVITIES MONTHS
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Organising a formidable Board
1 of Directors

Raising of Initial Equity Capital/


2 Sourcing for Loan

Commissioning of Architect and


3 other Engineering Consultants

4 Building Constructions

Engineering Procurement
5 Contract

6 Recruitment of Key Personnel

Purchase of Machinery and


7 Equipment

Arrival and installation of


8 Machinery and Equipment

Procurement of Initial Raw-


9 materials & Plant Test-Run

10 Plant Commissioning

Jatropha Value Chain > Feasibility Report/Business Plan 110


12.0 CONCLUSION

In our understanding, a business is sustainable when it meets the social, ecological and economic needs of the present without
compromising the ability of future generations to meet their own needs.

We are convinced that Jatropha is an economically viable alternative to many less sustainable biofuels.

With the availability of land, the promised Government support as stated in the Nigerian Bio-fuels Policy and with numerous

manpower availability in Nigeria, Investment in this project at this time is a right decision.

The project qualifies for carbon credit and attracts Social Impact donors, these are financial cushion that were not included in the
financial projections stated above.

The return on intercropping is a delight and can be described as the icing on the cake.

With all these, this project is recommended for any serious and future looking investor both local and/or foreign.

Thanks.

Yinka Ogunseyinde, FCA

+234 803 311 5070

Jatropha Value Chain > Feasibility Report/Business Plan 111


APPENDIXES
(DETAILS OF INTERCROPPING)

Jatropha Value Chain > Feasibility Report/Business Plan 112


Design and Assumptions

The aim of the intercropping of Maize plant on the Jatropha Curcas plantation is to maximize the use of resources by exploring
advantage of available space on the plantation thereby boosting the revenue accrue to the Jatropha Plantation.

The maize plant will occupy an estimated available space of 300 hectares of the plantation. The Jatropha plant has a 3 by 3 metre
space.

Details of Revenue and Expenditure for the intercropping of maize plant on Jatropha Plantation are as follows;

Revenue And Expenditure Accounts

Year 1 Year 2
N'000 N'000

Projected Revenue
Sales Of Yield 170,100 170,100

Less; Production Cost 18,827 12,337

Gross Income 151,273 157,763

Jatropha Value Chain > Feasibility Report/Business Plan 113


1 Production Cost Year 1 Year 2
N'000 N'000
Notes
i Acquisition Of Equipment 6,490 -
ii Cost Of Seedlings 142 142
iii Cost Of Fueling For Grains Planting 810 810
iv Cost Of Weeding (Herbicide) 900 900
v Cost Of Harvesting And Packing 450 450
vi Cost Of Processing 135 135
vii Cost Of Bagging And Packaging 9,900 9,900
Total Production Cost 18,827 12,337

Unit(s) Cost Total


2 Equipment Required N'000 N'000
Grains Planter 10 150 1,500
Grain Thresher Machine With Screw Elevator /Conveyor 10 335 3,350
Gravity Composite Grain Cleaner 5 175 875
Grain Sheller With Tools And Accessories 3 255 765
28 915 6,490

3 Seedling Requirement Year 1 Year 2


Mt'000 Mt'000
Annual Maize Seedlings Requirement For Planting 0.75 0.75
N'000 N'000
Costs Of Seedlings @ $600/Metric Tonnes 141.8 141.8 -

Jatropha Value Chain > Feasibility Report/Business Plan 114


Cost Per
4. Cost Of Fueling Machines 300 H.A.
N'000
i. Cost Of Fueling For Grains Planting (Diesel)
@ N200\Litre Calculated At 20 Litres Per Hectare 1,200
ii. Hiring Of Labour-(2 Labour Per Hectare @ N2,500 Per Labour) 1,500
2,700

Year 1 Year2
5 Cost Of Weeding (Herbicide) N'000 N'000
Cost Of Herbicide @ N3,000 Per Hectare 900 900

6 Cost Of Harvesting And Packing N’000


Hiring Of Labour - ( 2 Labour Per Hectare @ N2,500 Per Labour) 1,500

No. Of Hours Cost Of Cost Of


7 Cost Of Processing For 900 M.T. Fueling/Hr 900 M.T
Cost Of Fueling: N N
Threshers @ 40 M/T Per Hour Per Thresher 22.5 2000 45,000
Grain Cleaner @ 40m/T Per Hour 22.5 2000 45,000
Shelling Machine 22.5 2000 45,000
10 Litres Of Fuel Is Projected Per Hour for each
Machine @ N200 Per Litre
135,000

Jatropha Value Chain > Feasibility Report/Business Plan 115


8. Cost Of Bagging And Packaging Cost of
900 M.T
N'000
This Is Calculated @ 22 Bags Per M’ Ton @ N500 Per Bag 9,900

9. Projected Revenue

Expected Seed Yield From Intercropping Year 1 Year 2


Annual Yields In Metric Tons 900 900

N'000 N'000
Revenue @ $600/Metric Ton (N315 Per $) 170,100 170,100

Jatropha Value Chain > Feasibility Report/Business Plan 116