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Can Addax Bioenergy serve as an African biofuels template?

29 November 2011

Addax Bioenergy neatly dealt with the market and reputational risks that surround emerging markets biofuels deals. While it might serve as a useful template, there are few obvious candidates to follow its example. By Sarah Rundell.

Read more: [addax] [oryx] [makeni] [fmo] [eaif] [ifc] [cogeneration] [sugar cane]

Switzerland-based Addax Bioenergy’s signing in June of the Eu133 million ($180 million) debt financing for an ethanol plant in Makeni, in northern Sierra Leone, could influence both forthcoming African project financings and future biofuels deals globally. The project lenders, a diverse group of development finance institutions, have laid reservations about the war-ravaged country to rest, in its single largest investment outside the mining sector. It is also Africa’s first ever project financing of a greenfield, sugarcane ethanol development. It demonstrates that commercially viable projects can deal with the constraints of the International Finance Corporation’s per­formance standards and sustainability criteria. Comforting and co-ordinating Such projects have the potential to create reputational risk, given the criticism that biofuels projects in emerging markets can attract. The deal is also notable for comfortably combining seven African and European development banks. “It has taken quite some time to get here,” admits Nikolai Germann, managing director at Addax...

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