Thomas Gostner, Fri-El Green Power CEO
Abia State Governor, Theodore Orji officialy opens Fri-El Abia Palm during a ceremony held in July 2008.
A cluster of ripe oil palm fruits ready for processing.
Italian green energy company, Fri-El Green Power recently made a substantial investment in Nigeria by buying an oil palm plantation. The company plans to use the palm oil derived from the plantation to fuel its power projects in Europe. Jaco Maritz reports
With the steep decline in oil prices due to the global economic crisis, Nigeria's oil-dominated economy has recently taken somewhat of a beating. Diversifying the economy from oil has become an absolute necessity instead of a nice-to-have. One of the sectors that holds the most potential as a serious foreign revenue earner is agriculture. Nigeria has been able to attract a fair amount of agricultural investment, although this is not even a fraction of what is possible in a country that some see as the potential food basket of Africa and the world.
An Italian company, Fri-El Green Power has recently put its faith in Nigeria's agriculture sector through buying a palm oil plantation, Abia Palm, in Abia State in southern Nigeria. The formerly government owned plantation has been lying dormant for the past 13 years.
Fri-El Green Power is however essentially not an agriculture company, but rather one of Europe's leading clean energy firms. As one of the main producers of electricity from wind sources, the company is currently involved in 19 wind farms in Italy. Besides wind, Fri-El Green Power is also exploring other areas of renewable energy such as biomass, biogas and marine and river currents.
It plans to eventually use the palm oil processed in Nigeria to fuel liquid biomass power plants in Europe, although it will initially supply to the domestic market until the quantity of processed oil has reached profitable export quantities.
The oil palm is a tropical tree grown for its clusters of fruit which can weigh up to 50 kg. The plant originates from West Africa but has since been planted successfully in tropical regions across the world – Malaysia and Indonesia are currently the world's biggest exporters of palm oil. Each fruit contains a single seed surrounded by a soft oily pulp. Oil is extracted from both the pulp of the fruit and the kernel. Supermarket goods that contain palm oil include bread, crisps, margarine, cereals, lipstick and soap but in recent years it has gained popularity for its use a biofuel.
"Fri-El Green Power is committed to further diversify its mix of business lines," says the company's president Thomas Gostner. "Since 2005 we have been consolidating our activities in power generation from biomass. Power generation from biomass is neutral when it comes to CO2 emissions, as there is a zero balance between the carbon dioxide produced following biomass combustion and the carbon dioxide that plants absorb from the atmosphere during their life cycle."
At the end of last year, Fri-El Green Power's first liquid biomass power plant went into operation. It is situated in Naples, Italy with a 74.8 MW capacity and is Europe's second biggest thermal power plant fuelled by vegetable oil. The group is looking at implementing further liquid biomass projects which would increase its total installed capacity to 224.8 MW by the end of 2013.
Given the size of the above projects and the amount of processed palm oil they will require, it is clear why Fri-El Green Power is so keen to invest in oil palm plantations and mills. Besides Nigeria, the company last year also signed a deal with the Republic of Congo to grow 40 000 hectares of oil palm trees.
The company first started investigating the potential for palm oil production in Nigeria during 2005 and in 2007 the first privatisation agreement for Abia Palm was signed. In July 2008, Fri-El Abia Palm Ltd. was officially opened by the Abia State governor during a ceremony in Ohambele. Shortly after this, work on the rehabilitation of the plantation started. At the same time the old oil mill in Mbwasi was repaired and brought into production.
Fri El Green Power has an 80% stake in the project while the Abia State Government has 20% with an obligation to transfer 10% to the local community. The company got a concession of 11 292 hectares, including the former Abia Palm plantation, and a right to extend the concession up to 100 000 ha.
"With our project in Abia State, Fri-El Green Power is still checking its skills in establishing a durable business in agriculture," says Gostner. "A big challenge now is the rehabilitation of the old plantation in Ohambele and to guarantee a continuous supply of fruit to the mill in Mbawsi. At the same time we have establish a nursery to substitute old palms and prepare land for new plantations."
Given Nigeria's massive electricity shortage, does Fri-El Green Power plan on supplying electricity locally? "We plan to invest in the palm oil plantation, the processing of the fruit and convert it into electricity in Europe. However, each oil mill can additionally produce some electricity for local needs using waste product. The terms and solution's still have to be discussed with local authorities," says Gostner.
Fri-El Green Power is also well aware of the importance of government support for the project. "The state government is a fundamental partner, not for financial contribution, but it will enable a successful take-off environment and guarantee the safety of our investment."
At a handing-over ceremony last year, This Day newspaper quoted Abia State Governor, Theodore Orji saying that crude oil will come and go one day but that the state's palm trees would remain in the soil and that there is no turning back in making agriculture the source of not only food but also a foreign exchange earner for the state.
