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

Company History  
Energy Agriculture Uganda (EAU) was registered as a limited company in November 2007. EAU Ltd. has 3 shareholders. Test growing Jatropha Curcas started in Mukono district on company land February 2007. The company is also engaged in Jatropha test production on two farms in Moyo district ( West Nile province ). The company is closely associated with its sister company in Kenya, Energy Africa Ltd (Located in Shimba Hills, south of Mombasa ) and draws from its sister company's experience. The two companies share vision, strategy, logo and most of the share holders. The sister company Energy Africa Ltd has three years of Jatropha growing experience and 200 out growers, with over 200 000 Jatropha trees in Shimba Hills, Kenya.

Product  
The company core product is Jatropha Curcas oil. The oil can be refined into bio-diesel, utilized unrefined blended into diesel, or in its raw form for lighting and cooking. The raw Jatropha oil burns slower, and with substantially less air pollution than equivalent fossil fuel, making it an attractive alternative oil for cooking and lighting in rural areas.

Jatropha Curcus is optimal crop for the following reasons:

•  grows on rocky land and lasts for about 40 years;

•  is drought resistant; and relatively easy to grow and manage;

•  not edible and it is unattractive to wildlife and livestock;

•  mature Jatropha trees may produce significant amounts of oil and other useful by-products like seed cake

•  it does not compete with food production directly, it is not edible and grows in areas unsuitable for food production. It intercrops well with food crops

•  its oil burns 80% cleaner than fossil fuels

•  its more affordable than other alternative energies as it does not require new machinery (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 may also assess viability of other oil crops like castor.    

Market Considerations
Currently there is no substantial bio-fuel production in Uganda . Uganda imports all its fuel needs. This is expensive and leaves the country vulnerable. In addition declining fossil fuel reserves internationally, the encouragement of alternative carbon neutral alternatives gives Jatropha growing an advantage. There is an increasing awareness about the need to look for alternative sources of energy for both environmental and energy supply reasons. Incentives for bio-fuel production is likely to be introduced by the government of Uganda . Already there is legislation for a 20% mix of bio-fuel, but no plan to enforce this plan is in place as of today. In addition to bio-diesel for vehicles, a substantial part of the rural electrification in Uganda is generator based. Generators are often (with or without modification depending on model) suitable to run on bio-oil. Jatropha oil is a great paraffin (kerosene) substitute for cooking and lighting. Jatropha oil is also suitable for soap production.

EAU Ltd is primarily looking at the rural fuel supply market. Reasons are short distance from producer to consumer, reduced transport cost, and the relative high cost of fuel in rural areas. In the coming years the demand for Jatorpha seeds, seedling and cuttings for propagation will give EAU Ltd an initial market to tap. In rural parts of the country, especially in the West Nile province there are currently only limited cash crops in place. There is therefore an incentive to create a new cash crop and especially one with a local market. Previously crops with mainly a international markets have disappointed (e.g. cotton and vanilla).

Strategy  
The initial phase commenced in 2007 with experimental and scientific planting of Jatropha under various conditions in Mokono and Moyo districts. 3,300 plants have been planted by EA Uganda Ltd in Mukono. Focus in 2008 is on limited, but closely monitored production of Jatropha trees in Moyo. In addition EA Uganda Ltd is purchasing seeds. The market for seeds, seedlings & cuttings in East Africa is growing and may give an early business opportunity for revenue for EAU Ltd. If yields are promising and feedstock is adequate an expeller will be bought for test production of Jatropha oil in 2008/09. In late 2008 and early 2009, based on favorable findings from test farms in Moyo, large scale Jatropha planting will start in Moyo. It will based on an out-growers system. EA Uganda Ltd will be providing seeds/cuttings at low cost and advice farmers on growing Jatropha. There will also be a guaranteed minimum price for seeds to ensure a market for farmers. The local fuel market in Moyo, and West Nile province will be the initial market. Once this market is satisfied, bio-fuel will be sold to southern Sudan or to central parts of Uganda . In 2010/2012 more expellers will be bought and placed in various locations in West Nile province. Bio-diesel production will also start in this period, initially using a batch method. In addition to oil, there will be by-products like shells and residue for compost and methane gas development. Collaboration with research institutes like at Makerere University and GTZ will be valuable partners in developing capacity in oil expelling and use of residue. EA Uganda Ltd has links to various research institutions as well as other bio-fuel producers in East Africa and internationally. A web site covering both Uganda and Kenya operations will be used to share updated information about Energy Agriculture Uganda Ltd. Web address: www.energy-africa.com

Social and environmental aspects
Poverty in the Moyo district is widespread and pervasive, with food distribution during drought. After the collapse of cotton growing, there is no viable cash crop. The introduction of Jatropha has the potential to alleviate poverty and to offer the farmers a new profitable cash crop. The plant is not alien to Moyo/Uganda as it has historically been used medicinally, and as live fence. More recently it is used as a prop for vanilla due to its fast growth and unattractiveness to stock and wildlife. Environmental benefits from Jatropha includes fuel switch from fossil fuel to renewable energy and reduced erosion with increased tree planting/forest cover. Focus on out grower system will not disrupt the traditional community structures. The traditional challenges of migrant labour and associated STD/HIV and violence often associated plantations can thus be avoided.

Risks and assumption
Pioneer work carries substantial risk; the bio energy sector is no exception. One risk is that price of fossil fuel falls. Should this occur it will make profitable production of bio-fuels difficult unless subsidy is provided. Pests and diseases may affect the Jatropha trees adversely. Estimates are that profitability requires a yield of at least 2 Kg of seeds per annum per tree, and this is to be achieved without having costly inputs. Improved seeds and ways of increasing fruiting will be essential and should be expected in the years to come. There is potential competition from other renewable energy sources such as sun and wind, and other oil crops like oil palm and castor. The underlying assumption is that in East Africa where large areas of underutilized arid land are available, and other energy sources expensive, Jatropha is a suitable crop. The Government of Uganda 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 . An assumption is that Government will continue to show interest in bio-fuels and be a supportive partner in the development of bio-fuel, by 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, or that farmers will be unwilling to grow Jatropha Curcas on their land. EA Ugnada Ltd will offer competitive prices to the farmers, and will develop a good relationship with farmers so as to be their preferred partner/buyer.

Another challenge is that Energy Africa will not be able to attract sufficient investment to expand its operation and reach the required scale of production. It is assumed that our commitment to Jatropha, local area knowledge, practical Jatropha experience, own financial and non-financial contribution to EA Uganda Ltd and the general interest in investing in renewable energy will make the company an attractive partner. Political instability is still a real risk in Africa . North Uganda has seen a fair share of violence and war. Improved leadership, more accountability and economic development makes the war scenario less likely. Limited infrastructure investment (only expellers) will reduce EA Uganda Ltd's exposure. In case of insecurity EA Uganda Ltd would move expellers to a safe area (e.g. south to Kampala or north to Sudan , depending on the origin of threat). Jatropha trees are likely to grow for a longer time than any insecurity in the area. In case of unrest, traditional fossil fuels may be cut off. Local Jatropha fuel supply may compensate for this loss.

EA Uganda Ltd. December 2007