SIMPRA (a partnership between SEA-Enterprises and Post Road Advisors) is pleased to announce a mandate by VICA Technologies LLC to advise and arrange approximately $250 million for two projects to finance equipment and working capital for renewable energy projects in Mali and Nigeria, Africa.

The projects are Waste-to-Energy facilities each processing 292,000 tons of municipal waste per year creating ‘syngas’ to fire gas turbines and subsequent steam turbines (combined cycle process). These projects reduce pressure on overburdened landfills, remove waste in an environmentally friendly process. Each project creates employment of 200 employees, generates carbon credits and produces 20 Megawatts of electricity that will continuously export 132 GWH to the Malian and Nigerian, grid. Each project’s output can power approximately 16,000 homes. Non-combustible metals are sorted and sold to markets reprocessing. Ash waste is sealed in glass blocks.

Using a build own, operate and transfer (BOOT) project model, VICA Technologies LLC mandated SIMPRA to arrange finance for a facility that will operate for 15 years or more. This plant will be transferred to the Governments of Mali and Nigeria after the Concession periods. The projects have been granted concessions by both governments.

VICA is a company of professional engineers and project management specialists with a combined experience of over 100 years in the field of biomass energy. The group key personnel are Dr, Azuka Anyiam - CEO, Jerry Kindrachuk - CFO, Prof. Alexander Sedmak, Hiep Nguyen and Kenneth Hladun from Omega Thermal Technologies Inc.

SIMPRA is the exclusive and sole financial advisor to the project. SIMPRA is a partnership of project and structured trade finance professionals with Christopher Andoh (formerly of City of London Investment Management) and Maurice Johnson (formerly of GE Capital Commercial Finance). The $150MM of equipment is expected to be sourced from the US supporting the export initiative and investment agencies will be involved. The US Trade Development Agency supported the feasibility study.

Questions and clarification can be addressed to: Maurice Johnson +1 203 450 2498.

Clean Energy and Emerging Markets

Summer - I can almost hear the Beach Boys in the summer breeze - but I digress.

As you know, Post Road Advisors has entered into a cooperation agreement with SEA-Enterprises and we are cooperating on several projects. One interesting one is to establish a Waste to Energy facility in Mali and Nigeria, Africa. These facilities would process 150 tons of trash per year to relieve pressure on landfills, incinerate the trash in a clean facility, create 'syngas' to power a combined-cycle turbine to generate electricity for the national grid. Ash and heavy metals are encapsulated in glass bricks using the abundant sand (silica) in these Sahel and sub-Sahel countries.

So this project and our financial calculations bring to the point of - how to calculate the sales price of clean 'syngas' or 'clean energy'?

In the graph above, Andreas Schreyer of The Green Investor compares pricing of clean energy using as a proxy the ETF (Exchange Traded Fund) Power Shares Global Clean Fund vs Platts West Texas Crude price. As you can see there is a very strong correlation - in fact - the correlation coefficient is 0.9 with a perfect correlation between prices being 1.

The point is that Emerging Markets are key players in this sector with biomass and solar clean-energy projects and are affecting the clean energy price grid. It is critical for financial lenders to be able to predict price fluctuations using regression analysis techniques using WTC historical prices as a potential predictor of clean energy project out-put pricing. This is necessary to justify the financial proposals. We will address Multilateral Lenders Agency (MLA) in a later article.

But what does this suggest? Clearly, as oil fluctuates in price, synfuels will also (note the slight lag of the synfuels vs oil prices in the graph) and begin a correlated relation to the price of oil. These elements should be incorporated in sensitivity analyses for project evaluation. In this way we can better predict the pricing required for clean energy projects to service debt and equity. Therefore, we now have a relatively crude- but justifiable-model to sensitize clean energy and Emerging Market renewable energy models for financial projections to evaluate the projects. From here, with this high correlation coefficient, we can derive the NPV and provide lenders with adequate information to make a reasoned decision.

Now, to the beach.