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The Gerset Development Proposal Eritrea Sugar Company ESC

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Presentation on theme: "The Gerset Development Proposal Eritrea Sugar Company ESC"— Presentation transcript:

1 The Gerset Development Proposal Eritrea Sugar Company ESC
GERSET, Eritrea An Executive Report December 2012

2 Contents The Economic Profile The Legacy The Challenges
The Proposition The Structure The CSR Initiative

3 Eritrea

4 The Economic Profile

5 The Legacy Wefri Warsay Yika'alo (WWY) or Warsay Yika'alo Program
A successful Government Commitment Often compared to the Marshall Plan A series of Government sponsored investments in economic, education, health, and transportation related infrastructure A mixture of grants and loans from international organizations and from the Government of Eritrea Practical transfer of skills is an important component of this program. All planned 22 projects were completed except the construction of Keren Dam

6 The Challenges Demographics
Enthusiastic, Resilient and Young Population, with Competences High Rates of Education, Healthcare and Physical Fitness Low Urban Density and Facilities with Conventional Economic Sectors Committed Government and Civic Service, Despite the Fierce Embargo

7 The Challenges Agriculture Production

8 The Challenges Agronomics & Food Security
1.5 mln Capita are the Workforce for Rainfall based Agriculture Strategic Dams at Gerset, Fanko-Tsimue and Fanko-Rawi Strategic Transit and Transportation Systems & Solutions Formal Ambition towards Modern Farming and Agronomic Techniques Strategic Need to Develop and Improve Agro Productivity for Domestic and Export Use

9 The Challenges Gash-Barka Region Nationally;
37,000 Square Kilometers or a Quarter of Eritrea 2009 Real GDP $ 4.4 billion, and growth rate 3.6% Population of 567,000 or One Third of Eritreans Illiteracy estimates as high as 70%. Student-teacher ratios are high: 54 to 1 over 3.5 million Livestock Life expectancy at birth is 59.5 years in Low Expenditure on health and Number of Physician Rich in Marble, Minerals & Gold for 15% of GDP arable land of 565,000 hectares or 1,396,000 acres The Breadbasket of Eritrea with 350,000 H. or 900,000 A. Due to Droughts, Erosion and Deforestation; 70-80% of population depend on Food Aid Main Cities: Barentu, Agordat, Molki, Sebderat and Teseney

10 The Challenges Gerset Dam
Reservoir of the Dam can accumulate 10,000 cubic meters Second Reservoir will hold 20,000 cubic meters 20 Pivot Sprinklers are capable of watering 28 and 60 hectares Furrowing and Installation of the Irrigation pipe systems Leveling the land in blocks for smooth movement of machineries Power supply runs from Alebu to Golij via Fanko-Tsimué and Gerset dams

11 Impressions

12 Corporate & Capacity Building
The Proposition Eritrea Sugar Company (ESC) Corporate & Capacity Building Develop Strategic Sugar Industry Government Commitment for land and Irrigation Co-Produce of Strategic Subsidiaries Strategic Co-Generation of Electricity Spearhead Development of Gash-Barka Region Finance and Support Regional CSR Initiatives

13 The Proposition Gerset Sugar Project (GSP) Project Management
Annual 2,500 to 5,000 TCD of Sugar Sugarcane plantation on 5,000 to 10,000 Hectares Land & Irrigation Provided by Government Co-Generation of 14MW (2-3MW for Plant use) Investment Structure as per Feasibility Plan CSR Programs at 10% of Projects Value

14 The Proposition Gerset Development Initiative (GDI) Development
Management VOCATIONAL Vocational High School Vocational Training Programs EMPLOYMENT Priorities and Opportunities to Local Human Resources HOUSING Contributions to Local Housing Improvement Program URBANISM Developing a Local Integrated Community Center YOUTH Sponsoring Sport, Camping and Campaigning Activities EDUCATION Support Local Schools Support Local Teachers HEALTHCARE Developing a Comprehensive Local Healthcare Center INFRASTRUCTURE Contributions to Local Grids and Networking

15 Status 2012 Analysis, Risk & Actions ESC Assets Operations Liabilities
No Assets No Title Deeds Gov Approval for 5000 Hectares Transfer? Operations No Organization No Operations Corporate? Liabilities No Direct Liabilities Engagement? GSP Scope 2,5000 TCD of Sugar Plant 5,000 Hectares Sugarcane Plantation 14 MW of Co-Generation Farming? Methanol? Waste Water?

16 Investment 2012 Status, Sectors & Action ESC Government Developer
Approval on Proposal Commitment to provide 5,000 Hectares 2nd Party? Developer No Practical Deliverables Traded Assets in Recovery Agreement Penalties? Operator No Confined Role Procurement? Recovery Plan Ivory Capital Took over liabilities for US$ 10 mln+ Jurisdiction?

17 Orientation Comprehensive Plan ESC Corporate GSP Project
GDI Development Feasibility Review Project Planning Development Planning ESC Audit Report 2012 Investment Structure Engagement Management Compliance Report 2012 Project Plan Resources Management National Alignment Report Development Plan Communication Management Commitment Operation Deliveries Corporate Activation Production & Processing Sugarcane Farming Sugar Plant and Subsidiaries CSR Programs Investment Engagement Partnership Investment & Development Plan Operating Policies & Guidelines Sugar Farming Operator Sugar Processing Operator Development/Impact Investor EPC for Grids

18 Recovery Plan Domain, Goals & Actions Commitment Engagement Investment
Corporate Activation Production & Processing Corporate Social Contribution Comprehensive Audit? Engagement ESC Associated Developer Sugar Farming & Processing Operator Development/Impact Investor RRM & Parties? Investment Strategy & Feasibility Study Investment & Development Plan Operating Policies & Guidelines Investment Model? Operation Sugarcane Farming Sugar Plant and Subsidiaries CSR Programs Corporate Model?

19 Commitments Initial Engagement Year -2 Year -1 Year 1 Year 2 Year 3
Years 4-30 ESC Corporate & Capacity Building Corporate Structure, Policies & Guidelines Corporate Staffing, Training & Liaison Operations Marketing & Sales GSP Production & Processing Procurement of Developers, Operators & Suppliers EPC of Grids Electricity, Methanol & Waste Water Treatment EPC of Farms &Plants Sugar Production Farming Corporate Social Contribution Plan CSR Programs

20 Scope of Initial Engagement
H1/Year -2 H2/Year -2 H1/Year -1 H2/Year -1 H1/Year 1 H2/Year 1 ESC Corporate & Capacity Building Organization Strategy & BD Finance HR Legal Procurement Logistics Engineering Quality Sales Marketing Internal Audit Company Operations Marketing & Sales Operations GSP Production & Processing Procurement of Contractors, Operators & Suppliers EPC of Grids (Electricity, Ethanol, Potable Water) EPC of Plants Sugar Production EPC of Farms Farming Operations & Production Corporate Social Contribution Plan Planning CSR Programs Implementing CSR Programs

21 (IDM) Investment & Development Mgr
The Structure Operating System CSR Initiatives Partnership Gov Company Long Term Operations Full Exit Surrender Back to Public Project Consortium Operator(s) Recovery Projects & Operations Investor(s) 30 Years Partial Exit Design & Build Parties Equity Supplies (IDM) Investment & Development Mgr 3 Years Assets Equity EPC Contractor(s) Kick Off Launch

22 Partnership Framework Special Purpose Vehicle Local Development Plans
The CSR Initiatives Integrated Structures Partnership Framework CSR Framework Gov Liaison Co Gov Ownership Operating Company Local Authority Partnership Form CSR Initiatives Asset Based Value Development Targets Special Purpose Vehicle Local Development Plans PPP Product/Service CSR Programs

23 Gerset Development Proposal
References Interim Country Strategy Paper for Eritrea, Sugar industry in Eritrea: Business Report 2012 Sugar FEASIBILITY STUDY REPORT for TCD CAPACITY SUGAR FACTORY PROJECTS prepared by THE FEDERAL MINISTERY OF AGRICULTURE INVESTMENT DEVELOPMENT AGENCY (IDeA) Sudan India-Eritrea Relations, Ministry of Foreign Relations, India UNICEF HUMANITARIAN ACTION Wefri Warsay Yika'alo

24 Gerset Development Proposal
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