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SERREC CORP.

RENEWABLE ENERGY PROGRAM FOR AFRICA

INITIAL BIOMASS PROJECT PROPOSAL: 1st PHASE

B. N. Lindor Diop
20/06/2013
Project Proposal
1. Introduction of Project

Most of the African countries are experiencing severe electricity generation shortage; the supply cannot match the basic
needs of the population.

This is due to various inadequate and costly options made earlier on by governments and also by many exogenous
aggravating factors which are worsening the situation as time goes.

Many sustainable solutions are available but the lack of focus to deliver low cost electricity is hindering the prospects for the
entire economy to develop.

As a result, the cost of generating electricity being too high as compared to other Regions of the world, the companies
cannot produce competitive products in their own domestic market impeding any long term viable business and production
activities within the Region .

Therefore, the need to get away from the existing power generation systems which are unfortunately mostly based on types
of all good feedstock sources except the right and sustainable ones; especially for countries importing oil.

The challenge facing most of these countries is how to generate enough low cost and sustainable electricity to cater for
people needs (for both household and for economic activities).

SERREC has therefore teamed up with leading energy partners to propose an ambitious program covering the entire Africa
Region where it will be economically feasible. The program is broken down in five distinct phases.
The first phase consists in deploying within the West Africa sub-region ten Biomass power plant projects of 10 MW to 35
MW through a power purchase agreement to be signed with the in-country local utility company and backed up by the
government.

SERREC has decided to start in the northern part of Senegal, in the district of Saint-Louis with its first 30 MW biomass
power plant capacity to provide reliable clean renewable base electricity 24/7; over 8,300 hours per year to inject
210,000,000 kWh into SENELEC’s grid sold at US$ 0.14 per kWh.

SERREC is currently securing a 2,100 HA farm (99 years leased land at no cost) which will produce an average of 100
metric ton per hectare of dried grass to be used as feedstock for the direct combustion process by the power plant.

2. Business Model

The business model is based upon the carefully drafted “Take or Pay” provisions of the Power Purchase Agreement to be
signed between SERREC and SENELEC in Senegal for the implementation of this first phase; the same template is to be
used thereafter with the local utility company backed up by the government in the other hosting countries within the sub-
region.

a. Operational Plan:

SERREC concept: Biomass Power Plant co-located with SERREC Power Grass dedicated energy crop farm.
This is described as a closed loop power plant. Water and sunshine come onto land and electricity comes out.

Elements of Closed Loop Biomass Power Plant:

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b. Marketing Plan & Growth Strategy:

average selling price per kWh of US$ 0.14 and over 2 billion kWh of clean renewable electricity to be injected into West
African Grids. The potential to replicate this power plant is huge, and the new financing opportunities may be of great help to
achieve the program ambition.
he potential market is to be part of the energy mix as renewable energy producer player that can provide up to 5% of the
1 billion African energy needs as our target by 2023.
ty companies, governments, Policy makers and
indeed an efficient banking system in place to fund such programs.

3. Operational Timeline
• SERREC is the project developer and will sign the Power Purchase Agreement with SENELEC
• EPC contractor for power plant guarantees performance, cost and schedule
• Power plant and plantation in operation within 24 months from financial closing

4. Proposed Management, Implementation Team & Organizational Structure

SERREC Corp Board of Directors:


B. N. Lindor Diop; Mbaye Thiam; Saliou Samb; Cheikh Tidiane Sow; Papa Fara Diop

2013 MEMBERSHIP ON COMMITTEES OF THE BOARD OF DIRECTORS


Audit Committee: Chairperson: Papa Fara Diop,
Compensation and Executive Development Committee: Chairperson: Saliou Samb
Governance and Nominating Committee: Chairperson: Mbaye Thiam

SERREC Corp Management


Babacar Diop - RE Program Director, Africa
EPC Contract not awarded yet but identified; it is a global engineering and construction company and power equipment
supplier delivering technically advanced, reliable facilities and equipment.
PPA not signed yet but likely to happen within the next two months at the very latest.
O&M will be performed by SERREC local Engineering Team in Senegal.

5. Technology Description

SERREC has acquired and secured the property rights to use and grow its Power Grass all along the project lifespan within
Africa. Below are shown some characteristics of our unique feedstock.

5 m tall SERREC Power Grass


ready for harvesting.

SERREC Power Grass can be


harvested at 4-5 m tall twice a year for
at least seven years. It is a perennial
grass; there is no need to replant it
every year, as it grows back itself.
SERREC Power Grass has the
highest yield of any crop in the world,
and this makes it the lowest cost
feedstock producing the lowest cost
biomass electricity.

SERREC Power Grass is extremely


well-characterized. It has been
tested by many companies and
laboratories and the results are
consistent. A sample of the data is
provided below.

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SERREC Power Grass Proximate Analysis Unit Sun Dried (as received) Power Grass (Bone dry)

Total Moisture % 14 0

Volatile Matter % 65.68 76.37

Ash % 3.59 4.17

Fixed Carbon % 16.74 19.46

Total Sulfur % 0.11 0.13

HHV MJ/Kg 15.85 18.43

LHV MJ/Kg 14.52

Biomass power plants can also run on agricultural waste, but agricultural waste is seasonal and is not generally available on long-term contracts. The
agreement reached to use this dedicated energy crop will give SERREC the long term feedstock supply required since we are growing it in our own
capacity at our co-located farm. SERREC Power Grass is also suitable for making cellulosic biofuels such as ethanol and butanol, and
biochemicals and bio plastics.

SERREC Power Grass: A tropical climate is needed for the SERREC Power Grass to reach its fullest potential. It does
survive the South African winter freeze and is adaptable to a wide range of soils, but it does not like to be waterlogged,
grown in heavy clay soils, or in former rice paddies. To achieve the high yields, it requires significant rainfall or irrigation
equivalent to about 1000 mm per year or more. If there is a long dry season, irrigation may be needed. The SERREC Power
Grass is a natural grass. It is not genetically modified, and it is not an invasive species. To be a reliable source for a power
plant running 24 hours a day all year long, SERREC Power Grass must be professionally grown with good agronomy.
However, it is not difficult to grow, and the farm employee will be easily trained. Planting and harvesting is anticipated to be
performed manually even though we could have opted for mechanization.

Our biomass power plant has high-efficiency- 30% and requires about 55 ha of SERREC Power Grass per megawatt.
Together with our prudent approach of a 25% reserve, it makes it 70 ha per megawatt. Therefore our 30 MW power plant
would need 2100 ha of planted SERREC Power Grass.

Schematic of a the 30 MW biomass power plant showing bales of SERREC Power Grass entering the plant at the bottom
left of the diagram, in parallel with rice husks or other agricultural waste shown at the top left. The red boiler is specially
designed to burn straw. The boiler produces heat which boils the water shown in blue to make high-pressure steam that is
forced through a turbine connected to a generator to produce electricity. This is the same process that is used for coal or oil
fuelled power plants.

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6. Industry Analysis

ELECTRIC POWER CONSUMPTION EVOLUTION (KWH PER CAPITA) IN SENEGAL


The Electric power consumption (kWh per capita) in Senegal was 196 in 2009, according to a World Bank report, published in 2010. Electric power
consumption measures the production of power plants and combined heat and power plants less transmission, distribution, and transformation losses and
own use by heat and power plants.

The latest figures show that the need for IPP generation is very strong as SENELEC is still experiencing severe shortage to
meet the expanding demand for cheap electricity.

With the injection of 210 million kWh into the existing grid at a price of US$ 0.14, SENELEC will be able to start lowering its
average price per kWh sold to its customers, while connecting many prospective new rural household customers to its grid.

An extract of the latest figures related to power generation in Senegal (Source SENELEC’s website):

 Power Generation: 2,617,770 MWH


 SENELEC (State owned) 1,800,026 MWH
 IPPs 817,744 MWH
 Turnover:
 Annual production sold: 2,062,567 MWH
 Average selling price kWh 118 CFA Franc (US$ 0.236 kWh)
 Total sale (CFA F Million): 243,383
 Customers:
 Number of registered customers: 880,082
 Average annual consumption: 2,975 MWH

NB: Conversion rate US$ 1 = CFA Franc 500

7. Project Impacts

a. Environmental Impact:
It is not anticipated any negative or significant environmental impacts in terms of GHG reduction, air quality, energy
efficiency over other processes or water quality; instead the ash from the power plant will be dispatched to local women
farmers to enhance their productivity. In addition, the power plant is carbon neutral as the growing SERREC Power Grass
plants breathe and store carbon dioxide from the atmosphere. Burning plants in the power plant releases CO 2 back into the
atmosphere. However, since the next crop of growing plants reabsorb the carbon dioxide- it makes the overall process
carbon neutral. A final important point to stress is the savings made over fossil fuel for equivalent power generation of
210,000,000 kWh per year.

b. Social Impact:
As indicated above, SERREC has opted for manual planting and harvesting as this will rather allow using direct labour and
therefore injection additional long term cash in the local communities around the farm and the power plant. SERREC has
also committed to its social responsibility in building and participating in the proper running of medical facilities, promoting
women and children literacy programs as well as supporting schools in the immediate villages surrounding the project site.

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8. Proposed Investment / Financing Structure

The project total investment amounts to US$ 70 million financed by a third from Equity and two third by debt.

9. Projected Data Summary

Operating Data Summary 2015 2016 2017 2018


Turnover $29 400 000 $29 429 400 $29 458 829 $29 488 288
Gross Profit $21 462 000 $21 195 930 $20 915 188 $20 619 039
Income Before Tax $11 686 790 $11 907 481 $12 113 498 $12 136 107
Net Income $11 686 790 $11 907 481 $12 113 498 $12 136 107
Retained Earnings $6 686 790 $13 594 271 $20 707 769 $27 843 876

Financial Data Summary


Working Capital $6 586 790 $14 494 271 $22 607 769 $30 743 876
Total Debt $45 600 000 $38 800 000 $32 000 000 $28 000 000
Total Equity $30 986 790 $37 894 271 $45 007 769 $52 143 876
Total Assets $77 292 753 $77 424 620 $77 763 714 $80 926 685

Company Ownership (in shares)


owner 1: Off takers 11650000 11650000 11650000 11650000
owner 2: Sponsors 5825000 5825000 5825000 5825000
owner 3: Investors 5825000 5825000 5825000 5825000
Total Shares 23 300 000 23 300 000 23 300 000 23 300 000