Kijani Energy chose Africa, and specifically Mozambique for its flagship project due to the area's potential to produce bioenergy. Mozambique has been characterized as one of the world’s potential new “bioenergy superpowers." Favourable climatic conditions, large uncultivated tracks of arable and marginal lands, stable political conditions, a growing economy, and an ample low wage workforce are the key characteristics associated with the potential to become a potential major player in the biofuels industry.

 

Our cultivation and commercial operations related to our first project in Manica, Mozambique is operated under the name Odeveza S.A. It is expected that future projects will be under the umbrella of Kijani Energia Lda.

 

Apart from the above favourable features, Mozambique is an attractive investment destination for biofuel projects. Mozambique first highlighted the need to promote renewable energy sources in the country’s Action Plan for the Reduction of Absolute Poverty (2001-2005) and in the most recent national energy program (which lists the promotion and use of new and renewable energy sources in the electrification of remote areas as one of the main objectives). Since then, the government has engaged in a multi-level strategy to promote the biofuels industry.

 

The government has indicated its interest to invest directly in the biofuels sector. It has planned for the construction of a US$14 million biodiesel plant near the capital Maputo, with the aim of targeting the European Union market, and it has directed two of its state oil companies, Empresa Nacional de Hidrocarbonetos and Petromoc, to participate in the biofuels sector. Petromoc has outlined three potential biofuels projects (see the discussion below on the private sector) with a combined potential capacity of approximately 280 million litres per year of ethanol and biodiesel.

 

To further promote the sector, the government is on the verge of introducing a national biofuels strategy that is expected to include blending requirements, specific incentives and customs duty exemptions for the production of biofuels, and also to emphasize the need for a region-wide agreement on biofuels.

 

More broadly, Mozambique maintains an attractive environment for foreign direct investment (“FDI”) with an improving business climate and fiscal incentives. Mozambique was one of five African countries to win a 2007 award from the World Bank for improving the business climate: “Doing Business Reformers’ Club”. As discussed below, the pace of inflows of FDI, which has been picking over the past decade, has accelerated significantly over the past three-four years as the destination sector of projects widens beyond agriculture to mining, infrastructure development and other industries.