Smart Oil, LTD

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Overview

Developing a sustainable biofuel industry in Ghana

 

Overview

Headquarters: Ghana
Established: 2008
Impact Areas: West Africa
Type: For Profit
Energy Sectors:
Business Model Types:
Staff Size: 25
Annual Budget: $650,000
Major Funders: Futuris Spa (Italy)
Awards: 2009: BEST Fulbright
2010: CTI – PFAN Best Clean Tech Initiative in West Africa
2010:
 Italian confindustria young entrepreneurs award
2011: EC Grant: Energy Facility and Intelligent Energy $1M (Granted to Agroils subholding)
2011
: Santa Clara Global Social Benefit Incubator

ABOUT

Smart Oil is creating thousands of jobs in rural West Africa by producing a cheaper substitute for diesel fuel derived from jatropha plantations.

 

Energy Products/Services

  • Biodiesel plantations

Target Market

  • Smart Oil sells biodiesel as a diesel substitute in the Brong Ahafo Region in Ghana to be used for off-grid power generation ($350M market), fuel for cars, trucks and barges ($250M market).
  • As the production grows, Smart Oil will target regional markets including fuel to power GSM towers ($150M market with 300% annual growth), and international aviation carriers ($400M bio jet-fuel market for Lufthansa alone).
  • In the long term, the company aims to sign off-take agreements with leading renewable energy companies in Europe.

Org Name here

Revenue Streams

  • Sale of biodiesel

Value Proposition

  • Jatropha is a tree that annually produces non-edible oil seeds that can easily be converted into fuel oil or biodiesel.
  • Smart Oil grows Jatropha trees in large farms in rural Ghana and converts it into biodiesel for sale both locally and internationally.
  • Also, thanks to stable commercial relationships with local small farmers, Smart Oil creates permanent jobs in poor rural areas.
  • Locally, Smart Oil’s product is 20% cheaper than traditional diesel fuels, is environmentally friendly, and is an 80% reduction in greenhouse gases. It is appropriate for use in everything from local diesel generators to large, international aircraft carriers.
  • With 10,000 acres farmed in 2014, Smart Oil will annually produce 2 million gallons of a cheaper diesel substitute.

Problem Addressed

  • High financial and environmental costs of traditional fuels

Where They Are Now

Impact to Date

  • Proven reputation locally – 4 year project development and model validation
  • Employed 20 local workers
  • 10,000 gallons Biodiesel produced
  • 40,000 Jatropha trees planted

Milestones

  • 2008: 50 Acres of pilot plantations have been farmed. Agricultural model validated over last 3 years
  • 2010: Optioned 70,000 acres of land from local authorities
  • 2011: Pilot Biodiesel production
  • 2011: Equity investment by Futuris Spa

Growth Plan

  • 2012: 2,500 acres of farmland in production. Launch of family farming programs
  • 2013: Industrial production of biodiesel
  • 2014: 10,000 acres of farmland in production. 2,500 employees and contractors
  • 2016: 1 million gallons biodiesel sold
  • 2017: 2 million gallons biodiesel per year sold, production until 2020

How They Deliver

Product Sourcing & Design

  • Growing
    • Smart Oil is currently focused on the development of its initial plantation- 4,000 hectares over the next 4 years.
    • Smart Oil is also developing an outgrowing system, which will not be specifically focused on jatropha, but will also include other oil species and food crops, by 2013.
    • Smart Oil has been aggressively using agricultural inputs (fertilizer etc.) to increase the yields of its plantations.  They use approximately $400/hectare/year of fertlizer.   Yields are affected a great deal by rainfall, but Smart Oil is currently are getting a yield of between 1.5 and 2 tons of oil per hectare.
    • Smart Oil is currently trying to determine the best way to pay for seeds.  While the most logical way is to pay per kilo of seeds provided, this is not a legal way to contract farmers as a European company, and Smart Oil is trying to treat its farmers the same way they’d be treated in Europe.
    • Smart Oil is growing in a part of Ghana with very little economic activity, and very little land use, so they are not displacing food crops or other commercial farming.  Part of the reason is that farmers don’t have financing for inputs or mechanization, and Smart Oil provides this.
  • Extraction
    • Smart Oil’s oil extraction facility will be finished by the end of the year, but until then it will store its seeds for future use.
    • The planned capacity of the facility will be around 300kg/day oil .

Distribution

  • Smart Oil is initially targeting local markets for sale of its oil, but in the medium term plans to sell at least 1/5 of its oil to European customers.
  • Smart Oil is currently setting up new offtake agreements.  One major customer group is mobile phone companies looking to power rural cell towers.
  • Smart Oil also sees the aviation sector as quite a promising potential customer, as biofuel becomes legally required to become a part of their fuel use.

Revenue & Affordability

  • In the local market, Smart Oil’s biofuel is 20% cheaper than diesel fuel.

Financing

  • A Norwegian investment firm called Fjordcap/Futuris has a major equity stake in Smart Oil.
  • Smart Oil is also hoping to find industrial oil buyers who could also provide debt financing, offering a loan guarantee to finance production and a purchase guarantee for produced oil.

Social Impact

  • Smart Oil’s first measure of impact is the number of jobs created through its production of sustainable biofuels.
  • They will also measure the number of gallons of diesel displaced by their fuel, and have some internal metrics, such as the ratio of management salaries to total costs.

More Resources

Online Resources

Contact Information

Yeji, Ghana
( +233 247 44.44.28 (IT)
+39 346 6963 010 (GH)
* federico.grati@futuris.it
it.linkedin.com/in/grati