Feasibility StudyFuel Cane Power Generation ProjectforBarbados Agricultural Management Company, Ltd.

Prepared by:Schaffer and Associates International, LLC1020 Florida BoulevardBaton Rouge, Louisiana 70802 USA

DIVERSIFICATIONDIVERSIFICATION

POWER GENERATIONPOWER GENERATION

DIVERSIFICATIONDIVERSIFICATION

ETHANOLETHANOL

DIVERSIFICATIONDIVERSIFICATION

SPECIALTY AND SPECIALTY AND REFINED SUGARREFINED SUGAR

Introduction and Background

Barbados Agricultural Management Company, Ltd. (BAMC) developed a model to provide sustainable energy from cane residue (bagasse). This plan: Provides vision Diversifies energy sources Substitutes green fuels for fossil fuels Supports environmental stewardship Creates added value for cane farmers Promotes economic development

Introduction and Background

Summarization of Project Objectives: Investigate the viability of the fuel cane model Evaluate the current sugar estates/cane fields, sugar

factories and sugar production Assess the potential for power production Provide economic and financial assessment for BAMC

in the energy sector Determine the best way forward for BAMC in

developing its energy program Provide options and alternatives to the existing model

that will make it economically feasible

Introduction and Background

Summarization of Project Benefits: Fuel security

Ethanol fuel blends Green fuel for electricity product

Food security Tourism

Sustainable/renewable supply of electricity Minimal impact on tourist areas and green spaces

Economic Growth Driver Creates employment Creates economic stability for cane farmers and

investment confidence Provides renewable source of power (ethanol &

electricity)

Agricultural Operations

Cane Production– Commercial Cane– Fuel Cane

Harvest and Transport Company Agricultural Input Suppliers Farmers and Outgrowers

Industrial Operations

Sugar Production– Syrup– Molasses– Sugar– Refined & Specialty Sugars

Ethanol Production Power Production

– Bagasse– Natural Gas– Waste (Wood and Paper)

Options: Summaries

SAIL initially developed seven potential cogeneration models and ultimately nine that were taken into consideration:

Grinding Rates Acres of Cane in Production Total Tons of Cane Analysis (% Brix, % Pol, % Fiber, Mixed Juice Purity) Products (Specialty Sugar, Molasses, Refined Sugar,

Ethanol, Electricity) Power Generation

Note: The final two models using combinations of options were developed subsequent to the last site visit in September 2005.

Option #9. Case 2A + 1B with Combined Cycle Power

Assumed Gas Turbine Combined Cycle, Sugar Cane & HFC, Refined Sugar, Specialty Sugar & Fuel Ethanol (Case 2A + 1B with Combined Cycle Power)

Sugar cane: Fiber: 15.85%, Pol: 12.65% High fiber fuel cane: Fiber: 28%, Pol: 8% Production

– Cane 593,388 metric tons– Refined Sugar (local) 12,000 metric tons– Specialty Sugar (local) 5,000 metric tons– Specialty Sugar (export) 10,000 metric tons– Molasses 9,215 metric tons– Ethanol 14,000,000 liters/year– Electricity (bagasse) 102,751 MWh– Electricity (natural gas) 157,680 MW/year

Option #9. Case 2A + 1B with Combined Cycle Power

Benefits– High sugar production during part of the year and

high fiber for electrical generation and ethanol production during the remainder of the year

– Combined cycle makes up to 30 MW of firm power possible

Constraints– Need to find a suitable variety of high fiber cane– Requires larger initial investment

Acceptable:– Yes

Preliminary Indicative Capital Costs: $156.0 million

Project Economics (Option 9)

Major Foreign Exchange Earnings/Import Substitution Major Foreign Exchange Earnings/Import Substitution SavingsSavings

Product QuantityAnnual FOREX

Savings (U.S. $)

Fuel EthanolFuel Ethanol 14.4m liters/year14.4m liters/year 8.425 million8.425 million

SugarSugar 27,000 MT per year 27,000 MT per year (local/export)(local/export)

15.200 million15.200 million

MolassesMolasses 9,215 MT9,215 MT 0.844 million0.844 million

Power (from fiber)Power (from fiber) 102,800 MwH102,800 MwH 11.308 million11.308 million

Power (from natural Power (from natural gas)gas)

Balance up to 30 MwBalance up to 30 Mw

(158,000 MwH)(158,000 MwH)2.897 million*2.897 million*

Power (from waste)Power (from waste) 8,200 MwH8,200 MwH 0.902 million0.902 million

TotalTotal US $39.576 millionUS $39.576 million

* Difference between using Natural Gas versus Fuel Oil/Diesel

Project Economics

Historic FOREX Earnings under E.U. Preferential Historic FOREX Earnings under E.U. Preferential QuotasQuotas

Annual Quota Tonnes

EuroGross

Euro/Year

5031250312 725725 36.5 million36.5 million

5031250312 625625 31.5 million31.5 million

4930049300 525525 25.9 million25.9 million

4930049300 425 (US $25.1 million)425 (US $25.1 million) 20.9 million20.9 million

3209732097 425 (US $16.4 million)425 (US $16.4 million) 13.6 million13.6 million

Hence, the new Project’s FOREX benefits compare favorably with historical economics.

Project Economics

Any future additional land will be dedicated Any future additional land will be dedicated to Fuel Ethanol, Power and Molassesto Fuel Ethanol, Power and Molasses

Assures continuance of farming in the Assures continuance of farming in the traditional farming areatraditional farming area

Provides fuel securityProvides fuel security Project complies with E.U. Settlement Project complies with E.U. Settlement

RequirementsRequirements

Human ResourcesHuman Resources

New positions created by:New positions created by:– New product lines (ethanol, power, New product lines (ethanol, power,

specialty and refined sugar)specialty and refined sugar)– Extended crushing seasonExtended crushing season

Extensive re-training, where necessary, to re-Extensive re-training, where necessary, to re-locate existing technical stafflocate existing technical staff

Senior management to take on more Senior management to take on more responsibilitiesresponsibilities

Streamline overhead and administrative Streamline overhead and administrative functionsfunctions

Centralize all functions to new industrial siteCentralize all functions to new industrial site

RecommendationsRecommendations

For BAMC– New Multipurpose Factory– Cane Production – Replanting Scheme

Markets– Specialty Sugars/Refined Sugars (U.S.,

E.U., Canada, and Local)– Molasses– Ethanol– Electricity

High Fiber Cane Research