#1Opportunities in Nigeria's Bio-fuel Industry Presentation by H.E. Yusuf Maitama Tuggar (Ambassador of Nigeria to the Federal Republic of Germany) at the 12th German-African Energy Forum 2018 Hamburg 24-25 April#2Outline Introducing Nigeria ■ Renewable Energy Prospects in Nigeria Investment Landscape and potential Way forward ■ Conclusion#3Introducing Nigeria...#4Introducing Nigeria Although our country needs no introduction, for the record, Nigeria is: Africa's largest economy ■ The 26th largest economy in the world with half a trillion dollars in GDP ■ The largest Black population in the world with an estimated 182 million people ▪ Largest entrepreneurial population, mostly young people Very rich in natural resources#5Introducing Nigeria According to the United Nations Conference on Trade and Development (UNCTAD), Nigeria is a leading investment destination ■ Our Economy is fast diversifying with a growing Non-oil sector: Services (51%) • Agriculture (22%) Industry (26%) Oil (15%)#6Introducing Nigeria ■ We have a 6-8% GDP growth in real terms ■ Successful Finance space reforms. Sovereign/Corporate Eurobonds oversubscribed ■ Well capitalised financial institutions Sovereign Wealth Fund with over $1 billion under management and appetite for infrastructure co-investment $1 billion of pension funds available for infrastructure co-investments ■ Peaceful and successful democratic transition Fiscal buffers have stood in spite of oil price fall#7Renewable Energy in Nigeria Nigeria is greatly endowed with abundant renewable energy resources capable of meeting the country's needs...including massive supplies of water, solar, wind and biomass- as raw materials to produce green-energy. In 2005, the Federal government directed the Nigerian National Petroleum Corporation (NNPC) to commence the development of Biofuels Industry and other Renewable Energy sources in Nigeria. Thus, the Renewable Energy Division of the NNPC was created in August 2005 with the aim of not only enhancing Nigeria's energy capacity, but also boosting her economic prospects for potential global investment.#8Renewable Energy in Nigeria The Concept of the biofuel initiative is to: Link the Oil & Gas Industry with the Agric Sector through the commercial production of Biofuels from selected Ĕnergy Crops; in Use the Biofuels as blend-stock, or substitute for Gasoline and Petro-diesel Fuels to improve tail-gas emissions Transportation sector and mitigate Climate Change; Create Wealth and Green Jobs under a Low-Carbon Business Environment and diversify the Economy; Exploit other Renewable Energy Sources such as Solar, Wind, Geothermal and Waste-to-Energy, etc.#9Renewable Energy in Nigeria The Federal Government of Nigeria, through the Federal Ministry of Environment, has also put in place a Renewable Energy Programme aimed at ensuring the development and growth of the sector. Some of the projects of the Ministry include: Mining of Dumpsites in all major cities of the country to capture methane Establishment of Integrated Biofuel Production Facilities using sugarcane or sugar-rich Biomass in Nigeria. Each plantation measuring a minimum of 2000 hectares of land (Adamawa, Ekiti and Niger States ready for investment match-making) Provision of Renewable Energy Integrated Solar Dryers for rural communities. ■ Creation of smokeless villages using biodegradable wastes as part of government's rural energy security initiative.#10Renewable Energy in Nigeria Others include: Establishment of Solar PV grid-tied systems in the six geopolitical zones of the Federation. ■ Establishment of Wind Farms in 6 states; Plateau, Enugu, Sokoto States are ready for investors. Establishment of Waste-to-Energy Projects in 6 states of the country - Plateau, Rivers, Edo, Kwara, Ekiti States and the Federal Capital Territory. Establishment of the Abuja Green City- a city with zero carbon emission and is proposed to be modelled like Masdar city in the United Arab Emirates. - Establishment of Renewable Energy Village A village dedicated to technology development, manufacturing, assembly, distribution, sales and maintenance of renewable energy components. ■ Establishment of Renewable Energy Small and Medium Enterprise development institute. A training institute dedicated to training entrepreneurs to stimulate manpower development and wealth creation in the clean energy sector.#11Renewable Energy in Nigeria ■ Our bio-fuel project, as part of our alternative energy development strategy is geared towards utilizing our agricultural potential in cassava and sugar cane to produce ethanol that can serve as a good alternative to petrol currently in use. ■ Two types of automotive fuel are to be developed: Ethanol fuel (to be derived from sugar cane & Cassava) • Diesel (to be derived from palm oil) ■ The ethanol programme is to improve automotive exhaust emissions, reduce domestic use of petrol, free up more crude for export and position Nigeria for development of green field Along with other relevant agencies such as the Ministry in charge of power and the Nigerian Electricity Regulatory Commission (NERC), we are truly poised and committed to stimulating investment in renewable energy generation in Nigeria. The NERC, for example, has set for itself a target of generating a minimum of 2,000MW of electricity from renewables by the year 2020.#12Renewable Energy in Nigeria As noted earlier, Renewable Energy Resources in Nigeria include the following: Bioenergy Solar energy Wind Energy Geothermal Energy Waste to Energy#13Investment landscape and Energy Potential Energy Source Hydropower Biomass Solar Radiation Wind Geothermal Ocean, Tidal and wave energy Potentials 14,750MW (high potential) Very High potential 3.5 - 7.0 kWh/m²/ day 2-4 m/s (annual average) 5 Sources known in Nigeria (Ikogosi warm spring in Ekiti State and Wiki spring in Bauchi State, Lagos sub-basin, the Okitiputa Ridge, Auchi-Agbede within the Benin Flank/Hinge Line and the Abakaliki Anticlinorium (ECN- UNDP, 2005). ) Low prospects in Nigeria Source: National Energy Master plan#14Investment landscape and Energy Potential Nigeria's Biofuels Demand Potential Biofuels Type Time frame Short Medium Long Bioethanol (demand 1.3 in billion litres/yr) Biodiesel (demand in billion litres/yr) (at 10% blend) 0.233 (at 10% blend) Source: National Energy Master plan 3.4 (at 15% blend) 1.951 (at 20% blend) (>15yrs) 52.5 (at 50% blend) 12.7 (at 50% blend)#15• Investment landscape and Energy Potential Nigeria has high availability of energy rich biomass: Nigeria's available arable land is about 33 million hectares of which only 10% is in use Nigeria enjoys a warm tropical climate with relatively high temperatures through most of the year, and two seasons; Rainy & Dry Seasons ■ The rainy and dry seasons in Nigeria allows the leverage for different types of food crops to thrive ▪ The climatic weather in Nigeria ensures very high yield which in turn assures constant supply of feedstock for Biofuels production Source: NNPC#16Policy & Incentives In order to create an enabling environment for the development of Biofuels in Nigeria, the Federal Executive Council approved Nigerian Biofuels Policy (Gazette no. 72, June 20th, 2007) ■ The Nigerian Biofuels Policy, being consistent with best practice, offers a bundle of fiscal incentives for investors as tabulated below: ▪Off-take of Fuel Ethanol by NNPC ▪Accord Biofuels industry Pioneer Status ■Waiver on value-added tax on all services ■Insurance cover will be provided by the Nigerian Agricultural Insurance Corporation ▪Exemption from taxation, withholding tax and capital gains tax on foreign interest, dividends and services ▪Waiver on import and customs duties and other taxes on the importation and exportation#17NNPC Biofuel Projects Profile PROJECT Sugarcane 3 projects • Kupto (Gombe State) • Buruku (Benue State) • Agasha (Benue State) Cassava 2 Projects • Okeluse (Ondo State) ⚫ Ebenebe (Anambra State) CHARACTERISTICS Size 20,000ha Ethanol: 80 mm liters/yr per plant Sugar: 115,000t/yr Cogeneration: 60mw Irrigated Feasibility Study: under review EIA: Completed Size 15,000ha Ethanol: 60 mm liters/yr Starch: Optional Feasibility Study: Under review Oil Palm 2Projects ⚫ Cross River state EIA completed BUSINESS MODEL Business Type Co-investors/Deal Structure INTEGRATED PLANTATION & PLANT Incorporated Joint Venture with NNPC Investor Characteristics • Majority share • IJV operator • Established Financial Records • Access to proven industrial plant operations • Management Skill • NNPC minority shareholders • State/LG/Communities minority shareholders Project finance Financing type Size 10,000ha Biodiesel 40 mm liters/yr Plant technology Licensed technology Feasibility Study: Under review#18Expected Benefits ■ 2500 direct and 15,000 - 20,000 indirect jobs will be created ■ Increased food and energy production in terms of sugar, animal feed and electricity Improved rural economy in terms of small businesses that will spring up along the entire value chain of the venture ■ Increased revenue for the State ■ Reduction of youth restiveness, drug abuse and crime Improved agricultural practices through out-growers scheme Improvement in basic amenities such as water, schools, roads and healthcare facilities in the form of Corporate Social Responsibilities (CSR) Stem the high rate of the rural-urban drift#19Bio-fuels contribution to economic diversification POWER & ENERGY: Electricity: > 1,500 MW AUTOMOTIVE FUELS (Biofuels): MANUFACTURING: Chemical Products: . ⚫ Glycerin: • Fertilizer: 70 Million Litres /yr 100,000 MT/yr • Fuel Ethanol: 1.3 Billion litres/yr • Industrial Starch ⚫ Biodiesel : 0.5 Billion litres/yr • CO2-based Chemicals AGRICULTURE & FOOD: Mechanized Agriculture:Food Production: EDUCATION: • Research & Development . INDUSTRIAL CAPACITY BUILDING: • Bio-Electricity generation Biofuels Industry Flex-Fuel vehicles Assembly Bio-Chemicals SUSTAINABLE INFRASTRUCTURE: • Rural Water Supply Rural Roads: 300 Km Irrigation Rural Electrification JOBS & WEALTH CREATION: Employment: 100,000 Jobs Indirect: Over 400,000 Jobs Local Content: >70% Operations GDP Impact: 4-5 Billion USD/yr FDI: >2 Billion USD (Foreign Direct Investment) Carbon Credits: Cogeneration: 1.9 Million CERs/yr CO₂ Capture: 1.1 Million CERS/ yr • Sugarcane: 200,000 ha • Sugar: 1.8 Million tons/yr Direct: • Cassava: 150,000 ha ⚫ Starch: 0.3 Million tons/yr • Oil Palm: 125,000 ha • Palm Oil: • Jatropha: 125,000 ha • Animal Feed: 0.25 Million tons/yr 1,800 Million tons/yr#20Strategic approach ■ The Concept is to establish Biofuels Special Purpose Vehicles (SPVS) with reputable Core-investors Proposed Role of NNPC in the Business is to be a Co-investor in the entire value chain as shown below: Biofuels Operational Model Co-Investor (NNPC) Passive Investor (State Govt.) Core Investor Majority ownership Project development leadership Plantation & plant operation Maintain oversight functions on the business interest Minority ownership Initiate and support Project development processes and activities Equity holder Provide unencumbered land with free access Provide basic facilities to project site#21More opportunities for investment in Nigeria The thirst for cleaner energy is increasing mostly due to increasing environment-friendly policies Nigeria has embarked on numerous projects aimed at spurring socio-economic transformation, one of which is the construction and operation of 2 liquefication trains NLNG Train 7 & 8 Project (C3/MR trains) which will serve as a catalyst to unleash Nigeria's gas potentials and develop our gas resources. In Nigeria, gas is available in abundance and 3 times cleaner than oil in terms of carbon content, thus able to survive the future with increasing appetite for renewable energy. ■ Relevant stakeholders have committed to further expansion of the current 6-train complex in Bonny Island to create more value. This is projected to increase production potentials from 22MMTPA to 30MMTPA. ■ The Nigerian Liquefied Natural Gas (NLNG) Ltd is directly responsible for developing and executing the planned Plant expansion Project#22Way forward Sectoral spending requirements over the next five years in Nigeria are estimated as follows :- . Energy USD 48 Billion, Transport USD 36 Billion, Agriculture and Water USD 18.5 Billion. It is expected that over 40% of this infrastrcture spending will come from the private sector. This is where Nigeria needs your buy-in. We have an investment opportunity for which we require foreign capital to supplement whatever resources we can marshal at home.#23Conclusion Our President, H.E. Muhammadu Buhari has said at different fora, that Nigeria is ready for business. I have come to re-echo that call at this forum. We have established the right enabling environment; all we require is your collaboration for the mutual benefits of our collective countries.#24Thank you YOU