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St KITTS & NEVIS SUGAR TRANSITION PROGRAMME. Outline of presentation Events leading to the closure of the Industry Events leading to the closure of the.

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Presentation on theme: "St KITTS & NEVIS SUGAR TRANSITION PROGRAMME. Outline of presentation Events leading to the closure of the Industry Events leading to the closure of the."— Presentation transcript:

1 St KITTS & NEVIS SUGAR TRANSITION PROGRAMME

2 Outline of presentation Events leading to the closure of the Industry Events leading to the closure of the Industry Financial Implications of the closure Financial Implications of the closure Social Implications Social Implications Land use a pivotal problem Land use a pivotal problem Current Power generation opportunity Current Power generation opportunity Fuel ethanol opportunity Fuel ethanol opportunity Emerging technologies – energy cane, Emerging technologies – energy cane, Reforestation, pelletization, Methanation & Gasification Reforestation, pelletization, Methanation & Gasification Trading in Carbon Credits Trading in Carbon Credits

3 SITUATION Decision taken to close factory after consultations with all stakeholders. Decision taken to close factory after consultations with all stakeholders. EU announced price cut of sugar 39% EU announced price cut of sugar 39% Factory already a high cost producer over 40cents per pound. Factory already a high cost producer over 40cents per pound. High cost of cane and railway main contributors High cost of cane and railway main contributors Best production 40,000 sugar land 12,000acres Best production 40,000 sugar land 12,000acres

4 Situation Cont…. Mounting national debt (336billion) – sugar industry contributing 36 million per year. Mounting national debt (336billion) – sugar industry contributing 36 million per year. Sugar production fall to 12,000 on 7000acres. Sugar production fall to 12,000 on 7000acres person made redundant on July 30, person made redundant on July 30,2005 Demographics of workers – 300 women average age workers from Guyana and Dominican Republic Demographics of workers – 300 women average age workers from Guyana and Dominican Republic

5 Situation Cont… Average age of men 43 years. Average age of men 43 years. Most of the work force do not have transferable skills. Most of the work force do not have transferable skills.

6 Land Issues Non- Sugar Agriculture to take up about 1000 acres of land. Non- Sugar Agriculture to take up about 1000 acres of land. Sugar cane has been allocated 5500 acres of land. Sugar cane has been allocated 5500 acres of land. Good for soil conservation Good for soil conservation Good for esthetics and scenic beauty of landscape Good for esthetics and scenic beauty of landscape Employee preference to continue the custom in sugar cane cultivation Employee preference to continue the custom in sugar cane cultivation Land is limited highly competitive

7 Power Generation Owned by Gov’t – 22MW peak load Owned by Gov’t – 22MW peak load Aging infrastructure of diesel units total installed capacity 30MW. Aging infrastructure of diesel units total installed capacity 30MW. Need to replace 10MW immediately. Need to replace 10MW immediately. Cost of electricity 42.3cents per KWh. Cost of electricity 42.3cents per KWh. Oil price continually increasing. Oil price continually increasing.

8 Strategic issues If cane is unattended it will destroy the appearance of the island called “Sugar City” If cane is unattended it will destroy the appearance of the island called “Sugar City” Factory located near to city center and railway- narrow gauge expensive to maintain. Factory located near to city center and railway- narrow gauge expensive to maintain. Commercial railway attraction- Senic Railway Commercial railway attraction- Senic Railway

9 Strategic Issues Sugar Cane is good for land maintenance Sugar Cane is good for land maintenance Volcanic soils subject to erosion. Volcanic soils subject to erosion. Cane grows easily except in drought – yields drop Cane grows easily except in drought – yields drop

10 Opportunities It is estimated that below 400,000 tonne cane it will not be feasible to do cogen It is estimated that below 400,000 tonne cane it will not be feasible to do cogen CBI allows duty free ethanol to the USA CBI allows duty free ethanol to the USA Replace 10MW of electrical power 50% usage. Replace 10MW of electrical power 50% usage. 12million litres - ethanol 12million litres - ethanol Retain about 600 jobs. Retain about 600 jobs. Technology – for conversion – Gasifier Technology – for conversion – Gasifier 200kw/tonne – 20MW!!! 200kw/tonne – 20MW!!!

11 Opportunities The best converter of energy is the sugar cane. The best converter of energy is the sugar cane. It is the resource closest to oil in energy value and the only source available It is the resource closest to oil in energy value and the only source available With limited Land area the energy cane can provide 400,000 tonne? With limited Land area the energy cane can provide 400,000 tonne? Where is the Technology/Feasibility. Where is the Technology/Feasibility. What will be the impact on the economy of St Kitts and Nevis. What will be the impact on the economy of St Kitts and Nevis.

12 Emerging Technologies Biomass Pellets – Production Biomass Pellets – Production From wood From wood From bagasse From bagasse For Gasification process For Gasification process Out puts Out puts Electrical Energy Electrical Energy Ethanol Ethanol Co2 Co2 Export of Biomass Export of Biomass Reduction in Green House Gases – Trade in carbon credits Reduction in Green House Gases – Trade in carbon credits

13 Country Map

14 St Kitts & Nevis Geography Area: St. Kitts 168 sq. km. (65 sq. mi.); Nevis 93 sq. km. (36 sq. mi.). Cities: Capital--Basseterre (pop. about 15,000). Terrain: Generally mountainous; highest elevations are 1,156 m. (3,792 ft.) at Mt. Liamuiga on St. Kitts and 985 m. (3,232 ft.) at Nevis peak on Nevis. Climate: Tropical. Geography Area: St. Kitts 168 sq. km. (65 sq. mi.); Nevis 93 sq. km. (36 sq. mi.). Cities: Capital--Basseterre (pop. about 15,000). Terrain: Generally mountainous; highest elevations are 1,156 m. (3,792 ft.) at Mt. Liamuiga on St. Kitts and 985 m. (3,232 ft.) at Nevis peak on Nevis. Climate: Tropical.

15 Biomass Prod. Cont… Sugar Cane once occupied about 12,000acres Sugar Cane once occupied about 12,000acres Competition for land has reduced this … Competition for land has reduced this … Land above 1000feet dedicated to Forest Land above 1000feet dedicated to Forest Consideration for commercialization of forest reserves and extension on marginal lands to promote soil conservation and simultaneous production of energy. Consideration for commercialization of forest reserves and extension on marginal lands to promote soil conservation and simultaneous production of energy. Estimated land for reforestation – 1000 acres? Estimated land for reforestation – 1000 acres?

16 Evaluation of Business Proposals Company A Company A A company with synergies from linking the production facilities of pellet, ethanol and electricity production. A company with synergies from linking the production facilities of pellet, ethanol and electricity production. Value of investment – UDS 28 million Value of investment – UDS 28 million 6 MW Energy Plant – 50,000 kwh /yr- $13,716 6 MW Energy Plant – 50,000 kwh /yr- $13,716 Ethanol Factory 7,000 m 3 Ethanol Factory 7,000 m 3

17 Company A FACILITYCAPACITY USD (Thousand) Energy plant 6 MW (8.600h) $ Ethanol factory 7,000 m3 $3,740 Pellet factory 40,000 Metric ton $6,050 Harvest/ Transport 4 harvesters 9 tractors 20 trucks $4,800 SUM$28,306

18 Company A GOSKN input Invited to tender on 20% in equity Land Requirement 5050 hectares [lease hold] Jobs Approx. 800 Environmental Issues Soil erosion Soil & water pollution Air pollution

19 Company B Profitable Sugar Cane-Derived Energy System

20 September 19, Company B A system of 3 inter-connected plants, processing: A system of 3 inter-connected plants, processing: 1. Sugarcane to Ethanol (Bagasse is byproduct) 2. Bagasse to synthetic Natural Gas 3. Natural Gas to Electricity The last 2 plants provide excess heat to the first

21 Sugarcane Ethanol and Energy Sugarcane Ethanol Plant Gasification Electric Power Plant Sugar Cane Synthetic Natural Gas Ethanol Electric Power Bagasse

22 St.Kitts: (1) Ethanol Plant

23 Company B St.Kitts: Plant Gasification Plant Bagasse 2. No. of Parallel Lines:10 Annual Inflows tonnes Bagasse, Dry32,074 Water (for Steam)30,454 Total Inflows:62,528 Annual Outflows tonnes Methane Total9,941 CO2 High Purity28,911 Activated Carbon962 Water (steam condensed)22,143 Ash (from char)572 Total Outflows:62,528 Methane EXPORTED:8,812 MBtu=418,043 Equivalent Barrels of Oil=72,076 Gasifcation Plant St. KITTS-NEVIS

24 Gasifier Gasifier

25 St.Kitts: (3) Electric Power Plant

26 St.Kitts: Estimated Capital Costs Plant Component US$ million Sugar Cane Ethanol Plant 5.3 Gasification16.7 Electric Power11.7 System Total Capital Cost33.7 Project Capital Cost Estimate St. KITTS-NEVIS

27 St.Kitts: Pro Forma Revenues St. KITTS-NEVIS Export Item UnitQty/y US $/unitmillion US $ 1. Ethanol Plant:Ethanol gallon 4,207,768 $ DDGS (Distillers Dry Grains)tonne 11,588 $ High-Purity CO2tonne 12,166 $ Gasification Plant High-Purity CO2tonne 28,911 $ Activated Carbontonne 962 $1, Electric Power Plant Cont. Baseload Elect. (24/7)MWh 61,197 $ Total Operating Revenues21.43 A. Pro Forma Operating Revenues

28 Company B Superior to conventional Sugar or Ethanol solutions Superior to conventional Sugar or Ethanol solutions Superior to conventionally-fuelled Electric Power Plant Superior to conventionally-fuelled Electric Power Plant Retains 100% of the sugarcane infrastructure; adds jobs Retains 100% of the sugarcane infrastructure; adds jobs 2 Energy Renewable Products, will Appreciate in Value: Ethanol & Nat. Gas 2 Energy Renewable Products, will Appreciate in Value: Ethanol & Nat. Gas Biomass Energy segment can be expanded (low capital cost) Biomass Energy segment can be expanded (low capital cost)

29 Company B FACILITYCAPACITY USD (Thousand) Energy plant 6 MW (8.600h) $ Ethanol factory 3,804,491gallons$4.800 Gasification 40,000 Metric ton $15,100 Harvest/ Transport 4 harvesters 9 tractors 20 trucks $4,800 SUM$33,000

30 Company C This company is mainly focused on accessing a power purchase agreement and indicated a willingness to produce 32MW of power to the island. The sugarcane and ethanol production appears to be a compromised to their main thrust to produce power from petroleum coke. This company is mainly focused on accessing a power purchase agreement and indicated a willingness to produce 32MW of power to the island. The sugarcane and ethanol production appears to be a compromised to their main thrust to produce power from petroleum coke. The sugarcane operations is estimated to support a 6MW power plant. The sugarcane operations is estimated to support a 6MW power plant. Forecasted profits after two years. Forecasted profits after two years. Ready source of funding available. Ready source of funding available. Return plant to government after twenty years. Return plant to government after twenty years.

31 FACILITYCAPACITY USD (Thousand) Energy plant 6 MW (8.600h) $18,000 Ethanol factory 5,000,000 gallons $12,580 Sugar12,000 Harvest/ Transport 4 harvesters 9 tractors 20 trucks $4,800 SUM$33,998 Company C

32 GOSKN input Power Purchase Agreement. Land Requirement 7500 acres [lease hold] Jobs Approx. 400 Environmental Issues Soil erosion Soil & water pollution Air pollution

33 Comparison of Business Proposals ABC InvestmentUS$28.31MUS$33.00MUS$34M Electricity50GWh60GWh63GWh Cost of Kwh 16 cents 12 cents 16.7 cents Selling price 40.8 cents 32.6 cents ProfitUS$6.1MUS$5.35MUS$7.26M

34 Government Response Replace 8MW power with two 4 MW units in two years. Replace 8MW power with two 4 MW units in two years. Convert from the use of light fuels to heavy fuels ………. $58 to $60 per barrel Convert from the use of light fuels to heavy fuels ………. $58 to $60 per barrel To operate diesel plant on Heavy bunker ‘C’ …will see a 40% drop in electricity cost to 25.7 cents per kwh plus 1 cents fuel surcharge will cost 38 cents per kwh. To operate diesel plant on Heavy bunker ‘C’ …will see a 40% drop in electricity cost to 25.7 cents per kwh plus 1 cents fuel surcharge will cost 38 cents per kwh.

35 Government Response Set up energy Task Force to plot energy conservation and alternative energy strategy. Set up energy Task Force to plot energy conservation and alternative energy strategy. Considering Wind, Solar heaters, Geothermal etc. Considering Wind, Solar heaters, Geothermal etc. Need for policy guideline on land availability and tenure. Need for policy guideline on land availability and tenure. Energy security policy Energy security policy Power purchase agreements/Utilities Regulatory Power purchase agreements/Utilities Regulatory Ownership structure for engaging business sector in Biomass/energy- Political issue, history of ownership Ownership structure for engaging business sector in Biomass/energy- Political issue, history of ownership Policy for Purchase of ethanol & local use Policy for Purchase of ethanol & local use

36 Future prospects Pending proposal to produce ethanol from bagasse using gasification technology. Pending proposal to produce ethanol from bagasse using gasification technology. Feasibility study being conducted by Government in collaboration with UNDP, IICA & CREPD Feasibility study being conducted by Government in collaboration with UNDP, IICA & CREPD


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