Investment Opportunity: Biomass – Municipal Solid Waste to Energy

This group is in the process of building a waste-to-electricity plant in Panama, with the potential to build plants in two other cities in the country, using the same business model and technology within the next few years.   Each plant operates at approximately 50% profit margins, produces EBITDA of $26 million annually per plant, and uses proven technology.   The key –and most challenging– elements to build the facility are already in place (see below).

Here are a few things to like about the project:

Technology.    The gasification technology is to be provided by ACTI, a U.S. corporation whose technology has been certified by a study from an independent engineering review company.   Moreover, the technology has been certified by the State of California as the cleanest technology in its class.  These no-emissions, non-incineration, waste-to-electricity plants use gasification technology that has successfully been in commercial use.   Efficacy insurance guaranteeing the equipment’s functionality/operation is available by the international insurance giants AIG and AON.   In short, the technology is proven and established.

The group is building a 450 ton per day plant, using gasification technology, which will generate 12 MW of electricity, to be sold at $200 per megawatt-hour, payable by ETESA, the Panamanian power authority.

Project Status.   The group already has in-hand most of the key elements for success.  The couple items not yet in-hand are nonetheless very much “at” hand, and are immediately available upon a modest bridge loan.

Political Support.  The plant enjoys the strong backing of Panama’s highest elected officials, including the President of Panama and his Cabinet, and the Governors and Mayors of the respective municipalities where we are developing the plants.  Moreover, the candidate considered most likely to win the Presidency in May of this year is also someone to whom they have direct access, and who will undoubtedly support the project, as has every Panamanian official to whom they have presented the project.

Environmental Approvals.   The group has received approvals from ANAM, Panama’s environmental agency, with a remaining approval available within a month of bridge funding.  Because the technology does not have emissions from incineration, it is not regulated, and approval is therefore direct and noncontroversial.  A $25,000 fee is required for a final environmental study on the land, but they have already been told by ANAM environmental engineers, who visited the site with them and the Mayor of the city where the plant will be sited, that the approval is a formality and will take approximately 30 days.

Land Lease Agreement.   A 20-year contract is already in hand.

The Feedstock (Municipal Waste Supply).  20-year contracts are already in hand, issued by the municipalities.  The group currently has contracts for 250 tons per day, and has commitments for the balance of the 450 tons.  Moreover, the group can secure commitments for additional waste streams, as well.

Power Purchase Agreement.  An agreement-in-principle has been reached with ETESA (Panama’s electrical company) to purchase all of our electrical output at favorable prices.  ETESA representatives have reiterated several times that they will pay 21 cents per kilowatt-hour (although the group’s calculations were made at 20 cents.)  A formal PPA (power purchase agreement) contract will be available, pending bridge funding to complete the few remaining items and to pay the attorney fees for submitting the package.   The group is attempting to secure a conditional letter from ETESA stating that, upon meeting the various requirements, a PPA will be issued.

EPC (Construction) Contract.  The group has completed negotiations with Allied Construction of the USA.   We will also engage in negotiations to contract with the services of established firms that do business in Panama such as Hill International (Miami) or Constructora Urbana (Panama City) or MCM Corporation (Miami) or Constructora Noberto Odebrecht SA (Panama City) or COPISA Group (Panama), Meco (Panama), or Conalvias (Panama.)   All these firms were referred to us by major U.S. corporations doing development business in Panama.  Allied Construction has already worked with us on the ground in Panama.

Land & Building Siting.  Completed.

Municipal Waste Analysis.   Completed.

Technology Licensing Agreement.  The group has a completed agreement for ACTI.

Business Plan, Staffing.  Completed.    The group has a first-rate team of knowledgeable experts in place to run both the company and to supervise the O & M of the plants.  All we need is the money to pay them.

Municipal Community Presentations & Hearings.  Completed.   The successful conclusion of these meetings is what resulted in the Mayor and City Council approving the waste supply contracts and land lease agreement.

Construction Timetable.  Project will be completed and electrical generation will begin within 18 months from the start of construction.

ETESA – PPA Requirements.  Below (highlighted in bold) are the requirements from ETESA for them to issue a PPA.  The group provides its response to each in italics.

• General characteristics of the generation system and any other facility of transmission, transformation and distribution of electrical energy associated with it.

Status:   The detailed technology specifications are in the business plan.  ANAM, Panama’s environmental agency issued a statement that, since the plant’s closed-loop does not have emissions and does not involve any sort of incineration, it is not regulated.  As this is new technology to them, it does not fall into a regulated category.

• Time limits for all the works and installations, including the schematic timeline of the main activities of the project.

Status:  All this is already done and available to present.

• Duration of the license or concession that is requested, including the periods of construction.

Status:   20 years.  Already in hand.

• Description of the required easements.

Status:  This will be provided in a detailed report by our engineers upon the next visit to the site by our engineers.  They have already visited the site, and the easements are noted in the site plan.

• Certificate of the public registry, ownership, accreditation of economic and financial solvency, study of environmental impact approved by ANAM.

Status:  The group’s existing corporate registry in Panama has expired, but it will form a new corporation with by-laws, ownership, etc., upon its chairman’s next trip to Panama. 

In short, this is a project that can be PPA and construction-ready very quickly.  The completion of the elements necessary to secure the PPA relies on professionals who do this every day for a living.  That part is easy.  The hardest part is what the group has already done:  Securing the political support necessary to ensure everything gets fast-tracked.  That has already been done as evidenced by the contracts we have already secured and the testaments available by the Panamanian officials supporting the project.  When the political will exists, the rest is a formality.