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Profiles in Scale-up: China, Nigeria ink deal to invest $2.55B in 15 integrated biorefinery projects

| January 2, 2012

Chinese government to invest $1.78B in Nigerian biofuels, the latest in a series of projects announced in West Africa.

In Nigeria, Bloomberg and several local outlets are reporting that the Nigerian government has signed a $2.55 billion development deal with Global Biofuels, to construct 15 integrated biorefineries throughout the West African nation. According to reports, the first pilot plant will be completed in Ilemeso, in Ekiti State by Q4 2012, and projects thereafter will be completed in Ondo, Osun, Kwara, Kogi,Benue,  Gombe, Bauchi, Zamfara, Kano, Kaduna, Nasarawa and  Plateau states.  Project cost for the initial pilot plant is $108M, while full-scale plants are expected to cost $183 million each.

According to Global Biofuels, $1.78 billion, or 70 percent of the financing will come from the Chinese government. The remainder will come from NEXIM Bank, ECOWAS Bank for Investment and Development, Africa Finance Corporation; Fond Gari, and First Bank of Nigeria. The projects expect to generate 100 tons of total biomass per hectare, per yearn, using two cropping cycles per year, with total tonnage including tops, leaves, stalks and the primary crop. That equates to roughly 20 tons of total biomass per growing season, per acre.

But the massive Nigerian investment is just one of several announced in recent weeks and months in West Africa.

Nigerian Export-Import Bank:$695M

Just last week, the Nigerian Export-Import Bank gave $695 million to five companies investing in renewables including $12 million for a jatropha project and $56 million for a sorghum ethanol project.
The majority of the funding went to a sugarcane project that will include a bagasse co-generation component while the rest of the funding was for waste-to-energy projects.

Just before the US Thanksgiving holiday, the Ondo State Commissioner for Agriculture, Ademola Olorunfemi, said that the state would approve development of three sugarcane plantations and ethanol plants, with a focus on the production of biofuels and rural economic development. The Commissioner also said that the plants could provide materials for the bio-pharma industry.

The projects, whose goals center around industrialization and employment, indicate a new direction for the economy of this agriculture-heavy area of Nigeria.

Dangote Group, $7.7B

The same week, Aliko Dangote, the president of Dangote Group, announced an investment of $7.7 billion in Rivers Energy City, home of the budding $2 billion fertilizer and ethanol plant project put on by Indorama Eleme Petrochemical Company. His investment, says a top government source, will span into the methane and ethanol industries and provide thousands of jobs in the upcoming energy city.

Global Biofuels: $91M

In August, Global Biofuels has announced plans for ethanol plants across the West African region, with $91 million in sellers credit from COZA of Hong Kong and WEMET of China.  The final project is expected to cost over $183 million, and produce 72 million liters of ethanol from 1.95 million tons of sorghum per year, and 216 gigawatts of electricity.  Total land use as reported would be 65,000 ha in Nigeria and 32,500 ha in neighboring Economic Community of West African States member countries.

Also in August, Nosak Distilleries Ltd said it would raise production capacity at its Lagos facility to 540,000 liters per day from its current 350,000 liters per day. It also announced plans to commission a new 150,000 liter per day facility in Calabar, Cross River. Its first facility was commissioned in 2001 and together the company supplies about 70% of local ethanol demand.

The Bottom Line

Announcements of MOUs should be taken for what they are – an understanding that steel will go into the ground, as opposed to the actual construction of actual capacity. However, the trend is clear, scale is happening, project financing is becoming easier to source, especially overseas, and China is definitely expanding its ambitions with respect to countering the US lead in advanced biofuels technology, with a Chinese lead in actual gallons of renewable fuel.

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