June 2005
Is biodiesel Egypt's next big energy export? Amiral Biodiesal and the Sokhna Port are betting it can carve out a niche in environmentally conscious Europe.
The next time a European couple glides up to the fuel pumps to refill their environmentally friendly roadster with cleaner-burning biodiesel, they just might be buying Egypt's latest export product.
Amiral Biodiesel, a joint Austrian-Egyptian venture, broke ground in March on an 83.9 million biodiesel production project in Ain Sokhna's Sokhna Port, hoping to tap Europeans' growing demand for clean, sustainable energy sources. Biodiesel can be used in today's diesel engines with little or no modification and can be blended with petroleum diesel for vehicles with heavier power needs, yet it produces far fewer emissions than traditional diesel.
When it comes onstream next year, the company will become the nation's first large-scale exporter of vegetable-oil-based vehicle fuels. Amiral Biodiesel is a joint venture between Egypt's Amiral Group and Austria's Power Tech International (PTI). It plans to produce the environmentally friendly fuel using vegetable oils extracted from jojoba and jatropha plants for export to European and North American markets, among others, banking on low labor costs and plentiful desert farmland to help it undercut European prices.
Project managers believe they can price a ton of biodiesel, even with shipping costs, in the range of 330 per ton -- far below the cost of European biodiesel, which runs 500-540 per ton. Europe's appetite for biodiesel is set to grow in the next five years as countries push to meet a European Union requirement that biodiesel account for 5.75% of all fuel consumption by 2010.
Closer to home, the Amiral project is an integral part of a 20-year master plan for the development of the Sokhna Port, which government officials are positioning as the primary port and shipping logistics center south of the Suez Canal.
"Sokhna Port aims to be an active industrial area. It represents more than just a parking area for boats," said Minister of Transport Essam Sharaf at the groundbreaking ceremony.
"The biodiesel project is a good example of public-private partnerships an example of the privatization of state-owned projects," said Mahfouz Marzouk, chairman of the Red Sea Port Authority. While the port's location near the Suez Special Economic Zone is key for its economic activities, the Amiral Group is relying on the Austrian company's expertise to build the biodiesel plants.
Company and port officials alike are targeting foreign markets with the project. "We are making ourselves known to international markets more than to Egyptians because we're trying to pull them in," said Sharaf.
"The project will become a major foreign currency earner for Egypt by the third year It is intended for export only, since production costs cannot compete with local fuel prices," says Ahmed Abbassi, business development manager for the Amiral Group.
For Amiral, production begins with thousands of acres of jojoba and jatropha set to be planted this fall. The desert-friendly fruits prevent soil erosion, increase biodiversity and cut greenhouse gasses. Mature fruit is harvested, pressed and eventually processed with recycled used cooking oil in biodiesel fuel.
Two oil pressing plants worth a total of 15.3 million are to be installed and linked to two biodiesel plants that should cost a combined 31.6 million. At full capacity six years after operations begin, the plants should produce 90,000 tons of biodiesel a year.
Total investment in the project should top 75.9 million, with an additional 8 million allocated to the plantation, housing and the surrounding community infrastructure. Amiral has secured 88.8 million in loans to set up production and cover the cost of the first year of operations. Sixty percent of financing comes from local and international soft loans and 10% from bank loans; the remaining 30% consists of equity from project participants.
Executives are forecasting a positive cash flow starting in the fifth year.
"Starting the seventh year of the project onward, the total turnover rate is expected to be 26.4 million, and it will generate wide international interest as a pilot project to be copied in all arid or semi-arid barren areas with access to sewage water," says Abbassi.
Amiral estimates the plant will create 20,000 jobs when labor on the plantations is factored in.
Gazbeya El-Hamamsy
© Business Today Egypt 2005
