Can Addax Bioenergy serve as an African biofuels template?
29 11 2011
Switzerland-based Addax Bioenergys signing in June of the Eu133 million ($180 million) debt financing for an ethanol plant in Makeni, in northern Sierra Leone, could influence both forthcoming African project financings and future biofuels deals globally. The project lenders, a diverse group of development finance institutions, have laid reservations about the war-ravaged country to rest, in its single largest investment outside the mining sector. It is also Africas first ever project financing of a greenfield, sugarcane ethanol development. It demonstrates that commercially viable projects can deal with the constraints of the International Finance Corporations performance standards and sustainability criteria.
Comforting and co-ordinating
Such projects have the potential to create reputational risk, given the criticism that biofuels projects in emerging markets can attract. The deal is also notable for comfortably combining seven African and European development banks. It has taken quite some time to get here, admits Nikolai Germann, managing director at Addax Bioenergy, a subsidiary of oil trader Addax and Oryx Group. It has not been the easiest project to coordinate.
The project involves the development of a greenfield sugarcane plantation and construction of an ethanol refinery and biomass-fuelled power plant. The Eu133 million in debt has 12-year tenor and a four-year disbursement period to allow for construction of the ethanol factory, power plant and the first wave of sugarcane production. FMO and the Emerging Africa Infrastructure Fund were co-lead arrangers for the debt, which breaks down into a Eu19 million loan from EAIF, a Eu19 million loan from the Cordiant-managed and IFC-inspired...
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