Feasibility StudyFuel Cane Power Generation ProjectforBarbados Agricultural Management Company, Ltd.Prepared by:Schaffer and Associates International, LLC1020 Florida BoulevardBaton Rouge, Louisiana 70802 USA

DIVERSIFICATION

POWER GENERATION

DIVERSIFICATIONETHANOL

DIVERSIFICATIONSPECIALTY AND REFINED SUGAR

Introduction and BackgroundBarbados Agricultural Management Company, Ltd. (BAMC) developed a model to provide sustainable energy from cane residue (bagasse). This plan:Provides visionDiversifies energy sourcesSubstitutes green fuels for fossil fuelsSupports environmental stewardshipCreates added value for cane farmers Promotes economic development

Introduction and BackgroundSummarization of Project Objectives:Investigate the viability of the fuel cane modelEvaluate the current sugar estates/cane fields, sugar factories and sugar productionAssess the potential for power productionProvide economic and financial assessment for BAMC in the energy sectorDetermine the best way forward for BAMC in developing its energy programProvide options and alternatives to the existing model that will make it economically feasible

Introduction and BackgroundSummarization of Project Benefits:Fuel securityEthanol fuel blendsGreen fuel for electricity productFood securityTourismSustainable/renewable supply of electricityMinimal impact on tourist areas and green spacesEconomic Growth DriverCreates employmentCreates economic stability for cane farmers and investment confidenceProvides renewable source of power (ethanol & electricity)

Agricultural OperationsCane ProductionCommercial CaneFuel CaneHarvest and Transport CompanyAgricultural Input SuppliersFarmers and Outgrowers

Industrial OperationsSugar ProductionSyrupMolassesSugarRefined & Specialty SugarsEthanol ProductionPower ProductionBagasseNatural GasWaste (Wood and Paper)

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

Grinding RatesAcres of Cane in ProductionTotal Tons of CaneAnalysis (% 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 PowerAssumed 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%ProductionCane593,388 metric tonsRefined Sugar (local)12,000 metric tonsSpecialty Sugar (local)5,000 metric tonsSpecialty Sugar (export)10,000 metric tonsMolasses9,215 metric tonsEthanol14,000,000 liters/yearElectricity (bagasse)102,751 MWhElectricity (natural gas)157,680 MW/year

Option #9. Case 2A + 1B with Combined Cycle PowerBenefitsHigh sugar production during part of the year and high fiber for electrical generation and ethanol production during the remainder of the yearCombined cycle makes up to 30 MW of firm power possibleConstraintsNeed to find a suitable variety of high fiber caneRequires larger initial investmentAcceptable:YesPreliminary Indicative Capital Costs: $156.0 million

Project Economics (Option 9)* Difference between using Natural Gas versus Fuel Oil/Diesel

Major Foreign Exchange Earnings/Import Substitution SavingsProductQuantityAnnual FOREX Savings (U.S. $)Fuel Ethanol14.4m liters/year8.425 millionSugar27,000 MT per year (local/export)15.200 millionMolasses9,215 MT0.844 millionPower (from fiber)102,800 MwH11.308 millionPower (from natural gas)Balance up to 30 Mw(158,000 MwH)2.897 million*Power (from waste)8,200 MwH0.902 millionTotalUS $39.576 million

Project EconomicsHence, the new Projects FOREX benefits compare favorably with historical economics.

Historic FOREX Earnings under E.U. Preferential QuotasAnnual Quota TonnesEuroGross Euro/Year5031272536.5 million5031262531.5 million4930052525.9 million49300425 (US $25.1 million)20.9 million32097425 (US $16.4 million)13.6 million

Project EconomicsAny future additional land will be dedicated to Fuel Ethanol, Power and MolassesAssures continuance of farming in the traditional farming areaProvides fuel securityProject complies with E.U. Settlement Requirements

Human ResourcesNew positions created by:New product lines (ethanol, power, specialty and refined sugar)Extended crushing seasonExtensive re-training, where necessary, to re-locate existing technical staffSenior management to take on more responsibilitiesStreamline overhead and administrative functionsCentralize all functions to new industrial site

RecommendationsFor BAMCNew Multipurpose FactoryCane Production Replanting SchemeMarketsSpecialty Sugars/Refined Sugars (U.S., E.U., Canada, and Local)MolassesEthanolElectricityHigh Fiber Cane Research