Company Vision
Energy Africa Ltd a viable business growing Jatropha Curcas and/or other fuel crops, in collaboration with subsistence farmers. Improving the environment through tree planting and renewable energy production in Africa.

Company background
Today Energy Africa Ltd grows Jatropha Curcas for bio-fuel in the Shimba Hills on the south coast of Kenya. The company started experimental Jatropha Curcas test growing in 2004, and have so far contracted 200 farmers with over 200,000 Jatropha trees. Production started in 2004. The company was legally registered as a limited company in Kenya in January 2006.

Product
The core product today is Jatropha Curcas oil, from its seeds. The oil can be refined into bio-fuel and/or utilized blended into in diesel fuel. In its pure/raw form it is usable for lighting and cooking as well as making soap. The raw oil burns slower and with less pollution that fossil fuels, such as paraffin (kerosene). A large number of potential oil bearing crops exist. However, Jatropha Curcas trees are optimal for the following reasons:

•  they grow on rocky land and last for about 40 years

•  they are drought resistant and relatively easy to grow and manage

•  they are not edible and it are unattractive to wildlife and livestock

•  each mature Jatropha tree may produce significant amounts of oil ( 0,5 l ) and other useful by-products from the seed cake and shells, like fertilizer and methane gas;

•  there is no competition with food crops

•  they grow well together with food crops and grow in areas unsuitable for food production

•  its oil is said to burn 80% cleaner than fossil fuels

•  the oil is more affordable than other alternative energies as it does not require new technology (cars, generators etc. will run on Jatropha), as opposed to other alternative sources of energy (sun, wind, water)

•  many farmers know how to grow it, as it has been used traditionally as a live hedge and livestock fence/kraal

The company will assess viability of other oil crops like castor, possibly for intercropping with Jatropha.

Market potential
Currently there is no bio-fuel production in Kenya . The country imports all its fuel. This is expensive and leaves the country vulnerable. In addition declining fossil fuel reserves, the encouragement of alternative carbon neutral alternatives gives Jatropha advantage. We foresee increased demand for energy, economic growth and increasing population to cater for. This makes the market for bio-fuel highly interesting.

There is an increasing awareness about the need to look for alternative sources of energy for both environmental and energy supply reasons. Therefore, incentives for bio-energy production seem likely to be introduced.

The market for bio-energy is substantial. Jatropha oil may be blended in traditional fuel for use in diesel vehicles. In addition a substantial part of the energy in Kenya is generator based and would be suitable for bio-fuel. Jatropha oil is a suitable paraffin (kerosene) substitute for cooking and lighting. Jatropha oil is also suitable for soap production. There are thus uses from household level to national power supply level. It is a clean fuel.

Energy Africa Ltd is initially looking at rural fuel supply. The reasons are short distance from producer to consumer, reduced transport cost and high cost of fuel in rural areas due to poor infrastructure. Once supply of seed is sufficient, bio-fuel production is next stage.

Strategy
The initial phase commenced in 2004 with test planting growing Jatropha under various conditions in Shimba Hills. Test growing with 200 local farmers followed. Currently they are growing around 200,000 Jatropha trees with seeds and technical support provided by Energy Africa Ltd. InitiallyEnergy Africa Ltd paid an incentive to encourage farmers. All farmers have signed contracts with Energy Africa Ltd and agreed on conditions and selling prices.

A dedicated reearch project to identify high yielding plants and to ascertain fertilizing requirements, optimal pruning, yield maximization, spacing, intercropping etc. is planned. is The focus is producing high yielding Jatropha trees in the Shimba Hills that will make the venture more viable. In addition collaboration with various stakeholders locally, nationally and internationally will provide Energy Africa Ltd with important information.

Energy Africa Ltd is in collaboration with partners that are test growing Jatropha in other parts of the Kenya (Garissa, Mandera and Nairobi ), and have set up a sister company in Uganda . Energy Africa Ltd leases an area in Mukono District in Uganda . The Jatropha test farm started in March 2007 in consistence with the regional approach of the company.

Jatropha production in Shimba Hills is expected to expand substantially once knowledge of optimal pruning and growing conditions for Jatropha is established. Thus in 2007/08 Energy Africa Ltd will mainly focus on existing farmers and trees. Energy Africa Ltd will in addition explore the market for selling high quality seeds.

The company has collaboration with UNDP/GEF in Kwale District and links to research institutions, other bio-fuel producers in East Africa and internationally. A web site has been developed and will be used to share updated information about Energy Africa Ltd over the Web address www.energy-africa.com

Social and environmental aspects
Poverty in the Kenya is widespread. The area receives famine relief food aid during periods of drought. Food crops on a commercial scale are not viable due to soil infertility. Young people in the area move away to the towns hoping to make a living there, often with disappointing results. The introduction of Jatropha has the potential to alleviate poverty and to offer the farmers a new and sustainable cash crop.

Deforestation and erosion are a dangerous reality in the Shimba Hills as in other parts of Africa . Jatropha Curcas may help control erosion. The plant has historically been used as a grave marker, due to its fast growth and unattractiveness to stock and wildlife, and it is not an alien species.

The environmental benefit in fuel switching is big. Jatropha bio-fuel is carbon neutral, and burns cleaner than fossil fuels.

The out-grower system is socially conducive; it keeps societies and communities intact.

Risks and assumptions
Pioneer work carries substantial risk. The bio energy sector is no exception. The major risk is that price of fossil fuel falls substantially. Should this occur it will make the profitable production of bio-fuel difficult unless some form of short term subsidy is provided.

New and unknown pests and diseases may affect the Jatropha trees adversely. Profitability requires a yield of at least 2 kg of seeds per annum per tree, and this must be achieved without having to provide costly inputs.

There is potential competition from other renewable energy sources such as sun and wind, and other oil crops like palm oil and castor. The assumption is that in areas where large areas of underutilized arid land are available, and other energy sources expensive, Jatropha is a suitable crop.

Risk of rejection by the public of using bio-fuel as it represents a new and unknown fuel is a possibility. The assumption is that the consumers will welcome bio-fuels and the media will give an accurate and realistic picture of the benefits of bio-fuels for the environment and engines.

The Government of Kenya may or may not support bio-fuel efforts. Unless they encourage the use of bio-fuel it will be hard to develop the sector in Kenya . A basic assumption is that Government will continue to show interest in bio-fuels and be a supportive partner in the development by at least legislating for a minimum blend as has been done in Europe .

On the local level there is a threat of farmers selling their crop to other buyers, and that farmers will be unwilling to grow Jatropha Curcas on their land. An assumption is that Energy Africa Ltd will offer competitive prices to the farmers, and will have developed a good relationship with farmers so as to be their preferred partner/buyer.

Another challenge is that Energy Africa Ltd will not be able to attract sufficient investment to expand its operation and reach the required scale of production. It is anticipated that our commitment to Jatropha, local knowledge, practical Jatropha experience, own financial and non-financial contribution and the general interest in investing in renewable energy will make Energy Africa Ltd an attractive partner for investors.

ENERGY AFRICA Ltd. December 2007