This document discusses perspectives on biofuel investments in emerging economies from both potential investors and host countries. It outlines key considerations and needs for both parties, including motives, general needs, fiscal regimes, taxation, investment structures, and debt/equity swaps. The document provides an overview of a potential biofuel investment project process and specific issues to consider regarding legislation, government involvement, import rules, and non-payment by local buyers.

1. Investments in Biofuel Projects in
Emerging Economies
Two Perspectives
Jonathan Morley-Kirk
Financial Director, GBTF

2. Perspectives of potential investors and host
emerging economies
• Motives
• General needs
• Specific areas of interest

3. Jonathan Morley-Kirk
• Samuel Montagu & Co./Midland Bank Plc.
• S.G.Warburg & Co. Ltd
• Continental Capital Management Ltd.
• Fox-Davies Capital Ltd.

4. Countries - What do they want from investors?
•Inward investment
•Build up specific industrial sectors
•Infrastructure enhancements
•Employment and training of local workers
•Tax generation
•Others

5. Investors –What do they want from the host
country?
• Governmental certainties
• Fiscal regime
• Corruption control
• Red tape minimum
• Workforce
• Business operations – enabling regime

6. Foreign Private Sector Investors are not………
•The only solution
•Bottomless pit of investment monies
•Allowed to pay bribes
•Proxies for their home countries
•Mind readers
•All the same

7. Project Overview
• Planning
• Investment monies committed
• Development works
• Production
• Distribution of products
• Return of investment monies

8. Specific Investment Project Considerations
• Legislation
• Government Departments involved
• Imported Capital rules/restrictions
• Double Tax Treaties of host country
• Debt/equity swaps / debt for goods schemes
• In country taxation / customs duties

9. Investment Structure
Holding Company
Intermediate Company
Other Jurisdictions
In Country Investment Company
Project 1 Project 2 Project 3

10. Investment Structure
• Investment Monies In
• Production
• Sales -Domestic / Export
• Investment Monies Out

11. Debt / Equity Swaps
1
Investor Debt $
Local Currency 4 3 Local Currency 2
Project Central Bank

12. Debt / Equity Swap Example
• Investor buys $5 million FV debt @ 40 cents on the
dollar , cost $2mill
• Central Bank swaps debt for $2.5 mill equivalent of local
currency
• Investor invests local currency into local company to
invest in the project

13. Benefits of Debt / Equity Swap
•Reduce sovereign indebtedness and interest payments
•Improve balance of payments
•Attract more investors
•Possible to restrict repatriation of investment funds

14. Bioenergy Investments
• General Investment Regime vs Specific Sector/Area
Development
• JVs and Local Empowerment Laws
• Alcohol Related Matters
• Non Payment By Local Buyers
• Duties and Taxes

15. Country and Investor Needs
• Need investors • Modern legislation
• Need to raise • Investment made easy
employment levels • Fixed and fair taxes
• Businesses to • Red tape minimised
successful • Make suitable returns
• Raise taxation • Corruption stamped
• Raise global profile out

16. Thank you