2. Manufacturing and distributing drip irrigation systems
Biomass electricity generation
Cardboard packaging manufacturing
Production of vegetal charcoal (Scrub biomass)
Pharma packaging
Executive Summary
2
Herzfeld criteria Macro criteria
Potential return Encouraged by Cuban government
Social impact Positive global trends
Capital requirement FDI encouragement
4. Drip Irrigation Manufacturing and Distribution
PROBLEM
• 80% of basic consumer food
imported
• Low productivity – crop yield
• Only 21% farmed land with irrigation
• Water scarcity
BEING A PART OF THE
SOLUTION
• Equity investment into drip irrigation
system manufacturing and
distribution to small and medium
farmers in Cuba.
• Association of Small Agriculture
Farmers in Cuba (ANAP)
4
5. Social Impact
Community
Environment
Project in Pakistan Projections in Cuba
Crop yields by 40%
Input costs by 30%
Dependency on flood
irrigation
Reached more than 20,000
farmers
Crop yields by 10 -30%
Input costs by 30 - 60%
Daily income by USD 4
• 40-70% water saving
• 90% water use efficiency
• Reduce overexploitation of groundwater
• Minimizes erosion
5
6. Benchmark: Indian Project
Comparison
Cuba x India
Project
• Manufacturing and distributing systems
• Fund Investment: 1m
• 30% Equity
• Project Breakeven: 3 years
• Average return: 33%
Low labour cost / qualified people
Low irrigation access: India (35%), Cuba (21%)
Other financial
evidence
Jain Irrigation Systems LTD. – India
Gross margin: 33.9%
EBITDA margin: 15%
IRR for typical irrigation project = 11.16%
6
8. Biomass Electricity Generation
PROBLEM
• Shortage of electricity of 8-10h a
week
• Oil energy dependency (96%)
• Decrease high cost of energy
• Contribute to environmental
sustainability (sugarcane waste)
• Outdated technology
BEING A PART OF THE
SOLUTION
• Equity (joint-venture) in biomass
electricity generation
• Easy access input materials (Marabu,
Bagasse)
• Priority in Gov. development plan
• 24% renewable energy by 2030
8
9. Social Impact
Community
Environment
Access to energy
Reduce number of power shortages
Job offer increase between 35-46%
Development of supporting industries (plantations, transport)
• CO2 emission reduction by at least 30%
• Waste reduction by 50% (agricultural)
• Renewable energy source
• Sustainable forest development
9
10. Benchmark: Cuban project
Benchmark
Project
• Stage I 2008-2014
• Fund Size 1.28m
• FDI by Swiss Agency for Development and Cooperation
• Energy supply alternatives from biomass in rural areas
• Project IRR 7.4%
• Investment recovery in 2 years
• Net profits of stage I 1.82m
Other financial
evidence
Projects with different sizes in Cuba:
• Macurije: 32.3m
• Minas de Matahambre: 14.4m
10
12. Cardboard Packaging Manufacturing
PROBLEM
• 226m spent on packaging imports in
2014.
• 50% of demand is imported
• 50% local products lack proper
packaging
BEING A PART OF THE
SOLUTION
• Equity investment in cardboard
packaging manufacturing
• 42% projected increase in Cuban per
capita consumption of packaged
products
• Possibility to export to nearby
markets
12
13. Social Impact
Community
Environment
Food waste
Project in the UK
Increasing the shelf-life by 2 days reduced 4% of waste disposal
cost and avoided 800,000 strawberries to be wasted.
Tomatoes Study
Cardboard increased the useful life by 3 weeks
• Made from easy and fast-growing trees
• Cardboard is recyclable
• Energy-efficient
13
14. Benchmark: Belarus Project
Comparison
Cuba x Belarus
Project
• Production of corrugated board packaging (2012)
• CAPEX: 6-8m
• Project Breakeven: 2-3 years
• Average return: 25-28%
High imports
Main demanding industry is food and beverage
Other financial
evidence
• Global revenue is estimated to be over 1 trillion
• Paper and board represent 39% of consumption
14
15. Next Steps
Specific companies to invest1
2 Use the knowledge acquired
15
1.7
1.3
7.0
4.1
5.4
30.5
Manufacturing and distributing drip irrigation systems
Biomass electricity generation
Cardboard packaging manufacturing
Production of vegetal charcoal
Pharma packaging
Other projects and rounds
18. Next steps in Energy sector:
Production of vegetal charcoal from marabù scrub
CUBAN Project
Investing into equipment for• harvesting and transportation of marabú
ensuring sustainable supplies of the biomass required for charcoal production
and for forest replanting
In• Granma, Holguin, Camaguey and Ciego de Avila
Cuban party:• Empresas Forestales Integrales
Investment Amount:• 4.1 million USD
Vegetal Charcoal• produced– 3000 metric tons annual
Project available at: http://www.caribbean-council.org/wp-content/uploads/2014/11/Cuba-foreign-
investment-projects-Nov-2014-official.pdf
19. Next steps in Energy sector:
Benchmark: Biomass Plantations
Project available at: http://www.eq-cap.com/wp-content/uploads/Investment-Opportunities-in-Biomass-
Energy-Clark-Binkley-Ph.D-GreenWood-Resources.pdf
Project in Poland
• Phase I development –
10,000 hectares on low-
quality agricultural lands to
supply
• Long-term take-or-pay
contract with International
Paper-Kwidzyn for a 50 MW
coal CHP facility converted
to biomass
• Projected returns: 10-15%
real (USD unlevered)
Project in Chile
• Phase I development - 7,000
hectares on marginal
agricultural lands
• 3,000 to 5,000 trees per
hectare
• Projected returns: 9%-15%
real (USD unlevered)
20. Drip Irrigation System Manufacturing and Distribution
558,000
2,087,800
3,696,600
Land with irrigation
Primary market (farmed land without irrigation)
Secondary market (idle land)
Cuba Calculation provided for the chart: (hectares)
Agricultural Land
6,342,400
Agricultural land being farmed
2,645,800
Land with Irrigation
558,000
% of farmed land with irrigation
21.09%
Primary Market (farmed land w/o irrigation)
2,087,800
Secondary market ( idle land)
3,696,600
