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(Sharecast News) - West Africa-focussed agriculture company Dekel Agri-Vision has signed a joint venture agreement with European renewable energy company Green Enesys Holdings (GEG) in a bid to develop hybrid power projects (HCTPPs) in Côte d'Ivoire.
The AIM-traded firm said the development of the projects would be in line with its strategy to further reduce costs at its vertically integrated palm oil operation at Ayenouan, and also to scale up and diversify its revenue and asset base.
It explained that GEG has previously developed renewable energy projects globally, with a track record of developing over 490MW of solar photovoltaic (PV) projects.
The company had ongoing project development activities in Europe, Latin America and Africa, and was currently undertaking a feasibility study to construct an initial HCTPP in Côte d'Ivoire.
It was envisaged the HCTPP project would comprise a 30MW solar PV plant, and a 5-6MW biomass plant using feedstock from Dekel's Ayenouan project - specifically, empty fruit bunches from the mill.
Under the terms of the joint venture, special purpose vehicles (SPVs) would be established through which the required rights, permits and contracts would be obtained for the construction, connection and operation of the HCTPPs in the country.
Those would include power purchase agreements granted by and executed with the relevant authorities and entities, as well as operational licences, land lease agreements, and long-term financing for the construction, connection and operation of the plants under a project finance scheme.
The result of that would be that there was no requirement for Dekel, or its shareholders, to fund the projects.
Dekel and GEG would use "commercially reasonable endeavours" to assist the SPVs in procuring those matters, the board explained.
The proposed HCTPPs would be solar PV plants, combined with biomass or heat recovery, or any other renewable energy sources, including storage.
GEG would prepare the technical studies which would be required to be submitted to the Minister of Energy as part of the permit application process, and would also be responsible for the preparation of the financial model for each HCTPP.
Dekel said it would assist GEG in that work, and in particular would locate the relevant property and land for the construction of HCTPPs, support GEG in preparing the environmental and social studies covering the land where the plants are to be constructed, support GEG in obtaining the permits and licences necessary for the construction of HCTPPs, and supply the plant with available biomass materials from its Ayenouan project.
Each of the partners had a right of first refusal to participate in any green energy and complementary projects in Cote d'Ivoire and other countries in West Africa, to which the other party was exposed to or contemplating development.
Discussions with the Government to obtain the relevant power licence had begun, the company confirmed, and a "key next step" would be to submit the permit application.
Following the grant of the relevant permit, Dekel and GEG would look to secure the required project finance.
Dekel's board cautioned that there could be no guarantees that such licence or funding would be obtained, but said it would make further announcements as appropriate.
"The joint venture with GEG is in line with our strategy to build Dekel into a leading agro-industrial company focused on West Africa, with a portfolio of projects generating diversified revenue streams," said executive director Lincoln Moore.
"Renewable energy sits well with the collaborative business model we have deployed at Ayenouan and are deploying at the Tiebissou cashew processing project, which is currently under development.
"By identifying a shortfall in processing capacity and building a state-of-the-art plant to process local produce, our model places local smallholders at the centre of operations."
Moore said sourcing its own energy requirements from renewable sources, and taking part in government clean energy initiatives, not only made commercial sense, but also went "hand in hand" with the role Dekel looked to play in the communities in worked in.
At 1048 GMT, shares in Dekel Agri-Vision were up 11.84% at 2.74p.
11 Jul 2022 14:04
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