Africa Biofuel

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Overview

Providing green energy from local resources and improving livelihoods in rural communities

 

Overview

Headquarters: Nairobi, Kenya
Established: 2006
Impact Areas: East Africa
Type: For-Profit
Energy Sectors:
Business Model Types:
Staff Size: 8 management
Annual Budget: $250,000
Major Funders: EuphorbUS, The Wilma Group
Awards: 2008: World Bank Development Marketplace2010: Santa Clara Global Social Benefit Incubator, Springboard Clean Tech Award, Princeton Entrepreneurship Award

ABOUT

Africa Biofuel is working to develop the market for a new biodiesel feedstock for Africa, the Croton nut.

 

Energy Products/Services

  • Croton Megalocarpus biofuel commercial forests
  • Organic Fertilizer
  • Organic particle board for housing (made from seed presscake)

Target Market

  • Users of diesel fuel, charcoal substitutes and organic fertilizer in East Africa and beyond.

 

Africa BioFuel

Revenue Streams

  • Sale of biofuel and co-products from commercial forests

Value Proposition

  • Research by Dr. Lenard Milich, one of Africa Biofuel’s founders, has demonstrated that the croton nut can be used in diesel generators when husked, crushed and filtered into pure plant oil.
  • Because the croton nut is indigenous to East Africa, it has a much higher yield per hectare when planted in the region than non-indigenous jatropha.
  • Africa Biofuel is planting 12 million croton trees on under-utilized land in East Africa.
  • The seeds from Africa Biofuel’s plantations will be turned into pure plant oil, which will replace more than 10% of current Tanzanian and Kenyan diesel imports at a competitive price.
  • In doing so, Africa Biofuel will create a green fuel for a power hungry mining industry with an environmental public relations problem as well as creating more than 1,000 rural jobs and reducing CO2 emissions.

Problem Addressed

  • Tanzania’s government spends 35 – 40% of its foreign reserves to import fossil diesel fuel for mining, transportation and power generation.  This statistic is similar in Kenya.
  • Biofuels offer potential as a replacement for diesel, but have to be commercially viable in the East African environment.
  • Many companies have tried and failed to use jatropha curcas in East Africa, and many have failed to get optimum yields because jatropha is not indigenous to Africa and was only recently introduced.

Where They Are Now

Impact to Date

  • 1,000 liters of biofuel tested in a commercial engine with positive results
  • Application in process for planting sites
  • Tree nursery established in Tanzania
  • Currently finalizing first off-take agreement
  • Acquired 1 ton/day nut crushing operation

 

Milestones

  • 2006: Africa Biofuel registered in Tanzania
  • 2008: Agreement with Tanzania electric utility TANESCO for fuel purchase
  • 2010: Environmental impact study began in Tanzania
  • 2010: Sister office opened in Kenya and memorandum of understanding signed

Growth Plan

  • 2011: Planting 12 million trees in Kagera District
  • 2011: First processing plant operational
  • 2013: First harvest from planted trees
  • 2017: Positive cash flow

How They Deliver

Product Sourcing

  • ABF will grow its croton in plantations which will include 20,000 hectares of core forest controlled by ABF and 40,000 hectares planted on contract by area farmers.
  • Combining a core plantation and contract farms allows ABF to guarantee buyers a minimum amount of fuel production from its core plantation, but also to save resources and allow area farmers to derive greater benefit from the program.
  • The plantations will be grown on currently unused land, and intercropped with food crops and grass.
  • Croton has been used for lighting and heat for centuries, but ABF discovered its potential as an engine fuel.
  • The trees will take 3-5 years to begin producing and 10 years to reach full capacity.

Government Relations

  • Since most land in Kenya and Tanzania is government owned, Africa Biofuel is in the process of securing land management permits from the Kenyan and Tanzanian governments to grow Croton trees through large scale reforestation of national denuded forest lands.
  • The viability of ABF’s market for biodiesel is based on securing the supply chain for company feedstock; first to market to secure the commercial customer base; and private equity for expansion from the existing 1 ton crushing operation to a scalable 20 ton per day site.

Revenue & Affordability

  • ABF’s croton oil will be priced based on the market rate, discounted off the current price of crude oil.
  • This is a bargain for users, as the croton oil doesn’t need to be refined, but this compensates for the newness of the product.
  • ABF will sell on contract to large businesses currently using diesel, but needs to get financing for its plantations before buyers will commit to contracts.

Financing

  • Financing has been a major challenge for ABF, due to the perceived risk associated with the introduction of a new feedstock into a developing marketplace in Africa.
  • ABF’s investment challenges are also partly due to the huge amounts of money lost in the past 5 years by investors in African biofuel projects using non-indigenous Jatropha, estimated to be in excess of  US$200m.
  • ABF expects to deliver a high return to investors, however, revenue will begin in year 3 and ramp steadily when company commercial forest plantations have grown to production size.

More Resources

Online Resources

Contact Information

Africa Biofuel and Emissions Reduction Ltd.

Hurlingham House
P.O. Box 63973-00619
Nairobi, Kenya

US:
121 Pelham Lane

Fort Mill, SC  29715

( +254 732 873 747+ 1 (803) 802-2634
* info@africabiofuel.com