Jatropha Q & As
1. What happens if my trees die, or are ravaged by disease or an act of God?
All trees will be replaced up to the minimum term of 35 years at no charge to the tree owner. The programme manager will replace all dead or low-yielding trees and any which become unproductive due to factors beyond normal control, including but not limited to political, agricultural and weather risk.
2. Who buys the end product?
The programme manager has established and developed the markets so they sell energy and not oil. The energy is usually sold to the grid, principal outlets, blue chip and established companies (if they manage energy distribution) or in some cases, governments.
3. What happens when I have completed the application form and purchased my trees?
You will be required to complete a Purchase Management Agreement and this, along with your application form and investment amount, will be forwarded to the programme manager. You will be allocated a Tree Account Number and, within 30 days of receipt of cleared funds and signed Purchase Management Agreement, you will be issued with a Tree Certificate which recognises the trees’ birthday. Newsletters and updates will be provided regularly and your revenues will be paid to you at the end of each year, following your trees’ birthday.
4. Can we choose which country we have our trees in?
This isn’t possible as some of the programmes are fully subscribed. Returns are similar throughout the plantations.
5. How likely is it that I will be able to re-invest my returns in the future?
The programme managers are constantly scouring the world for land which will be suitable for the Jatropha programmes. There will be availability in the future but it is difficult to set timeframes due to the ever growing popularity of the programmes.
6. How does the programme benefit local populations?
It is very empowering for local farmers as there is no sense of charity. They are given the seedlings, shown how to look after them and the programme managers agree to purchase the fruit produce from them at the end of the year. The pricing element is critical. The programme managers pay less than food crop returns so they don’t displace these primary food crops. Jatropha is placed as fencing or peripheral land crops.
7.What is the background of the programme managers?
The Executive Chairman and Co-Founder has built several multi-million dollar sales operations including the design, implementation and roll out of a web-based, multi-outlet international on-line brokerage operation which was sold into a US small-cap public company for which he was a CEO and director. This public company had an independent subsidiary oil company of which he was also CEO for a period and upon this industry knowledge was founded the Green Oil operations. He has worked as an independent business consultant for the last three years. The principal role has been the commercialisation of companies within the emerging carbon markets and renewable energy sectors including plantation management, carbon consultancies, and biodiesel and bio-plastic processing. One of the plantation management companies has secured commitments for $42m of funding from US hedge funds as a direct result of the investment and exit strategies implemented by him and which are now owned and have been developed by the programme manager. He has established his own small holding in Asia as well as working closely with farmers and plantation owners in the region to understand, evolve and implement the business models through actual ‘in the field’ experience as well as financial commitment. It is through the shop floor experience and detailed financial, market and product analysis and comprehension that this business has been built and driven forward into the market, allowing an entry point and solid career path for the public, corporations and institutions into the renewable energy sector and emerging markets – a truly commercial and sustainable business which positively impacts on the environment, people less fortunate than us and everyone working with us.
8. What would happen if the programme managers were made bankrupt?
The purchase of trees is an ‘Alternative Asset’ class purchase: the tree owner literally owns the tree which is oil producing and therefore valuable. The programme manager works alongside two other project management companies who are positioned to not only bring their expertise to bear but are also ideally positioned to continue to manage operations should the programme manager become insolvent. In reality, the critical question is whether they will go bust. Every part of the business generates revenue and all the overheads, except for a small proportion, are performance related. Let’s take the oil tree for instance. We know from the Nursery Programme that the seedling has a value of 4p. The programme manager charges £1 for this and gives a very secure return of 20%, with the balance of the money being used for sales fees, irrigation, fertilisation and operations including farmer costs for the first two years while the crop comes to capacity. This means they have almost no risk on execution of business plan and more than sufficient revenue to meet overheads as it is all pre-paid. They also have security through the farm exit price for the Green Oil as the programme manager owns the value chain through the biodiesel and power production processes which significantly enhances the revenue per litre. They have a target production of about 9 to 10m litres this year, which is more than D1 Oils. Every part of their business runs like this with carefully budgeted operations and lots of ‘concrete wellies’ – conservatism. It is also important to reiterate that they do not sell Green Oil, they sell energy, be it Biodiesel or electricity, which clearly has a huge market and considerable demand to sell into.
9. Some of the plantations are not in the most politically stable areas. What safeguards are in place to ensure the local Populations reap the financial rewards as opposed to the governments?
The UNFCC call this the trickle down effect – how do you get the money to the farmer! Simply put, we pay the farmer for the fruit. Issue solved. We control the profitability of each plantation (operational costs vary obviously between countries) and one of our drivers is to ensure some of this profit is fed back into the communities. We control all of this.
10.This scheme appears to be the ‘perfect’ investment, but what guarantee do I have that my pension will be safe if I invest it in Jatropha trees?
If we were to analyse the word ‘safe’ today, I suspect we would come up with a very different descriptive to one only a few months ago, particularly if we banked with an Icelandic bank! Are the Project Managers professional and serious – yes; Is the Product being sold into a market with considerable demand – yes; Is there Considerable political, commercial and environmental support for the product – yes; Is there an alternative to undermine the compelling commercial story for Jatropha – no. I guess the 64 million dollar question is ‘will this change’ – and destroy the value in the pension? I believe
not. I believe this is a ‘core wealth’ opportunity. Why? Because crude Oil mineral rights have considerable value and this will continue as long as heat engines or plastics, paints etc are used.
Green Oil mineral rights – Jatropha plantations – are equally if not more valuable as they have really no declining oil reserves, are renewable and are attached to considerable community, commercial and political reasons for continued use. But I think the clincher for me is that this Green Oil is really the driver to the energy value chain which we create. We sell energy, not oil. And energy demand is on the up. Not only that, point me to any energy source that can create electric, lubricate and power transport and power production or even produce oil based plastics? How much, assuming there is one, would this cost to replace an energy resource that is almost self funding? The biggest risk to your money is the failure of The Project Managers or the failure of the country within which your plantation trees are held. Dealing with this in reverse order, if your trees die, drop in yield or there is a ‘force majeur’, we replace them or transfer ownership to other trees in other countries if necessary. The Programme Managers failure is very unlikely: we have a growing base of oil trees ourselves and operate on costs being met from production with very few fixed costs. However, should we fail, the plantation management companies who operate our plantations can step in to take over the management and continue generating revenues for a green oil product with a global market demand. Additionally all the refineries are operated on a ring fenced BOO (Build,Own and Operate) basis, so are independent from any commercial failures within the value chain.
