vvv.pdf

Project document

Economic Comission for Latin America and the Caribbean (ECLAC)

Design and feasibility study of an ethanol distillery in Guyana

Eduardo Algodoal Zabrockis Manlio F. Coviello

This document has been prepared by Eduardo Algodoal Zabrockis, consultant of the Natural Resources and Infrastructure Division of ECLAC and Manlio Coviello, Economic Affairs Officer of the same Division, within the activities of the project Energas Renovables para el Desarrollo Productivo Endgeno de Pases Alto-Andinos y del Caribe Meridional (ITA/06/001), in collaboration with the Government of the Republic of Guyana.

The views expressed in this document, which has been reproduced without formal editing, are those of the authors and do not necessarily reflect the views of the Organization.

United Nations Publication

LC/W.276 Copyright United Nations, october 2009. All rights reserved Printed in Santiago, Chile United Nations.

ECLAC Project Documents collection Design and feasibility study of an ethanol distillery in Guyana

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Contents

Overview ...................................................................................................................................7 I. Introduction................................................................................................................................. 11 II. Basic design data and technical criteria ...................................................................................... 13 III. Engineering design basis ....................................................................................................19

III.1 Process............................................................................................................................ 19 III.2 Raw material .................................................................................................................. 20 III.3 Product ........................................................................................................................... 20 III.4 Process description......................................................................................................... 22 III.5 Input requirements.......................................................................................................... 25 III.6 Other operating parameters ............................................................................................ 26 III.7 Specifications of inputs .................................................................................................. 26

IV. General investment items............................................................................................................ 31 V. Basic layout and site location ..................................................................................................... 33 VI. Economical - Financial analysis ................................................................................................. 37

VI.1 Guyanas Ethanol demand estimate ............................................................................... 38 VI.2 The Ethanol sales price definition .................................................................................. 39

VII. World economic reorganization.................................................................................................. 59 VIII. Conclusion .................................................................................................................................. 61

VIII.1 The project...................................................................................................................... 61 VIII.2 The macro-economic scenario........................................................................................ 62 VIII.3 The funding .................................................................................................................... 62

IX. Recommendations....................................................................................................................... 63 Bibliography ...................................................................................................................................... 65

Annex A- Suppliers detailed package ....................................................................................... 67 Annex B - Oil, Mogas, Ethanol Prices Statistical General References ...................................... 83 Annex C - Ethanol Production, Import-Export General Statistics.............................................. 89 Annex D - CBI Ethanol Production, Import-Export Data .......................................................... 90 Annex E - PRAJs Project Similar Ethanol Plants ..................................................................... 93 Annex F - Typical Vinasse Fertigation in Dry Land, Brazil....................................................... 94


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Tables Table 1 Personnel and shifts ...................................................................................................... 13 Table 2 Plant capacity ................................................................................................................ 15 Table 3 Typical molasses specification...................................................................................... 15 Table 4 Typical viscosity range of cane molasses ..................................................................... 16 Table 5 Specifications recommended by the Brazilian International Trade

Association (IETHA) .................................................................................................... 16 Table 6 The vinasse of molasses composition ........................................................................... 18 Table 7 The preliminary design is based on molasses C............................................................ 20 Table 8 Fuel grade ethanol as per ASTM D-4806 ..................................................................... 21 Table 9 Vinasse production and solids concentration ................................................................ 21 Table 10 Utilities and chemicals .................................................................................................. 25 Table 11 Lees and steam condensate ........................................................................................... 26 Table 12 Molasses-c quality process specification ...................................................................... 26 Table 13 Efficiencies according to volatile acids variation in molasses-C .................................. 28 Table 14 Yields of ethanol per ton of molasses-C ....................................................................... 28 Table 15 Petroleum consumption ................................................................................................ 38 Table 16 Growth of gross domestic product ............................................................................... 38 Table 17 Project general data....................................................................................................... 38 Table 18 Mogas average CIF prices............................................................................................. 39 Table 19 Ethanol world market prices ......................................................................................... 39 Table 20 Assumptions.................................................................................................................. 40 Table 21 Revenue and costs ........................................................................................................ 42 Table 22 Disbursement cronogram ............................................................................................. 43 Table 23 Capital expenditures ..................................................................................................... 46 Table 24 Amortization schedule ................................................................................................. 48 Table 25 Cashflow ...................................................................................................................... 49 Table 26 Income statement ......................................................................................................... 50 Table 27 Sensivity........................................................................................................................ 52 Table 28 Cashflow - price ........................................................................................................... 53 Table 29 Cashflow - molasses price ............................................................................................ 54 Table 30 Cashflow - investment ................................................................................................. 55 Table 31 Macro economical scenarios ......................................................................................... 57 Table 32 Critical and proprietary equipment provided by suppliers on

CIF Georgetown Guyana basis ..................................................................................... 69 Table 33 Capital bought out equipment within packet on CIF Georgetown Guyana basis ........ 70 Table 34 Equipment to be fabricated by project on site under suppliers specification............... 71 Table 35 Critical and proprietary equipment and components by supplier on

CIF Georgetown Guyana basis ..................................................................................... 71 Table 36 Bought out items by the supplier on CIF Georgetown Guyana basis ........................... 72 Table 37 Equipment to be fabricated by the project on site under the suppliers specifications . 73 Table 38 Critical and proprietary equipment provided by the supplier on CIF

Georgetown Guyana basis............................................................................................. 73 Table 39 Bought out items by the supplier on CIF Georgetown Guyana basis ........................... 73 Table 40 Equipment to be fabricated by the project on site under the suppliers specifications . 74 Table 41 Stage I ........................................................................................................................... 74 Table 42 Stage II .......................................................................................................................... 74 Table 43 Bought out items by the supplier on CIF Georgetown Guyana basis Stage I ............... 75 Table 44 Equipment to be fabricated by the project on site under the suppliers specifications 75 Table 45 Instrument list for hiferm fermentation section ......................................................... 75 Table 46 The description relates the instruments which belong to the distillation system,

bought by the supplier................................................................................................... 76 Table 47 Instrument list for molsieve section .............................................................................. 77


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Table 48 Instrument list for ecovap evaporation section.......................................................... 78 Table 49 PLC & basic specification............................................................................................. 78 Table 50 Bought out components ................................................................................................ 80 Table 51 Front - end battery limits............................................................................................... 80

Figures Figure 1 Project Location ............................................................................................................ 14 Figure 2 Basic Layout ................................................................................................................. 34 Figure 3 Site Location Layout reference drawing ...................................................................... 35 Figure 4 Site Location Aerial View............................................................................................. 36 Figure 5 Variation graph ............................................................................................................. 52 Figure 6 Sensitivity Variation ..................................................................................................... 62 Figure 7 Typical PLC basic control automation system.............................................................. 79 Figure B1 Oil, Mogas, Ethanol Prices Statistical General References........................................... 83 Figure B2 US Real Gasoline Price: Annual Average 1919-2009 .................................................. 84 Figure B3 US Regular Gasoline Prices: Nominal and Real........................................................... 84 Figure B4 US Imported Crude Oil Prices: Nominal and Real ....................................................... 85 Figure B5 Platts Ethanol NY 5-15 x Nymex Gasoline .................................................................. 85 Figure B6 Platts NY 5-15 x Brazilian Domestic Price................................................................... 86 Figure B7 Price Index .................................................................................................................... 86 Figure B8 Landed Costs of Crude Oil Import from Selected Countries ........................................ 87 Figure B9 US Ethanol Market Prices............................................................................................. 88 Figure C1 Ethanol Production, Import, Export General Statistics ................................................. 89 Figure D1 US Ethanol Imports - 2007 ........................................................................................... 90 Figure D2 Dehydration Capacity ................................................................................................... 90 Figure D3 CBI Capacity Share 2007........................................................................................... 91 Figure D4 CBI Capacity x Quota ................................................................................................... 91 Figure D5 US Ethanol Imports from CBI - 2007 ........................................................................... 92 Figure E1 Manuelita, Colombia..................................................................................................... 93 Figure E2 British Sugar, United Kingdom..................................................................................... 93 Figure F1 Typical Vinasse Fertigation in Dry Land, Brazil .......................................................... 94 Figure F2 Typical Vinasse Fertigation in Dry Land, Brazil .......................................................... 94


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Overview

This study envisages the basic technical and economic-financial model for the implementation of a fuel ethanol distillery plant in Skeldon, Guyana at the Guyana Sugar Corporations (Guysuco) new Skeldon industrial site.

Under optimal conditions, the plant will be able to produce, a maximum of about 35,000 cubic meters (m) of ethanol per year or 7.7 million imperial gallons per year. The plant will produce about 23,400 m during the first operational year, according to the available feedstock.

The Economic Commission for Latin America and the Caribbean (ECLAC) developed a general study on ethanol production based on the fermentation and distillation of sugar cane molasses. The molasses for the project will be obtained from the sugar process at Guysuco.

The ECLAC study proposes a mixture of up to 10% ethanol in the imported mogas volume, which in 2007 reached approximately 124,000 m. This mogas volume indicates, at a 10% blending level, a demand of 13,000 m of anhydrous ethanol in the first year of operation.

The Guyanese economy is growing and therefore an estimated 2.5% per year growth was added to the mogas volumes to be imported during the tenor period.

The ECLAC study was not able to foresee or assess a decision recently made by Guysuco management related to the projects basic construction plans. Guysuco determined that the Skeldon plant will not be able to supply the distillerys utilities needs, requiring the distillery to install its own equipment, which substantially increases the overall investment costs. On the operation side, there will also be a negative impact on costs because the main utility, the required process steam, will be generated by wood and/or rice waste combustion.

Another fact is the need to process the distillerys main effluent, namely vinasse, which cannot be disposed of in the existing water canals, because of its negative environmental impact. This issue was technically solved by the use of an appropriate technology, which obtains a concentrated vinasse with a solid content level that can be used as a partial feedstock for a fertilizer preparation to be applied at the sugar cane fields.

The necessary vinasse concentration equipment will also increase the investment cost. The final costs will have to take these additional expenses into account, as well as the costs for the various buildings, such as the laboratory, the water treatment station, biomass fuel storage and handling systems, and other such structures.


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After considering this unforeseen situation, a new strategy was designed. The simulation had to look for an economy-scale project engineering design that could process all the available molasses, some 90,000 tons per year according to Guysuco. This can be processed by a 120,000 litres per day distillery, producing 23,400 m per year of anhydrous ethanol, during 205 operation days.

This production corresponds to an ethanol mixture level of up to 17%, which is feasible in electronic fuel injection engines in existing car models. Flex fuel cars are expected to become more common in the near future, and this will increase ethanol demand.

The countries that have started using ethanol as fuel have adopted a low blending grade, of 5% to 10%, because they have huge or much higher mogas consumption than Guyana. It would require a huge amount of ethanol to reach a 20% grade, for instance, at the beginning of the initiative in those countries. Brazil has an E-23/25 mogas grade currently, but it began blending in 1975.

Guyana has preferential trading arrangements, and is part of the CTP-Caribbean Trading Partnership and Carican-Canada, which will allow it to access favorable market conditions if it needs to export surplus ethanol during the first few years of the project.

Capital expenditures are estimated at US$ 18 million, which with the higher project production cost and with the adopted ethanol sales price conditions does not make the enterprise feasible. The capital expenditures could be adjusted to approximately US$ 12 million if the vinasse concentration plant were not necessary.

The ethanol initiative is valid under Guyanas macro-economic scenario, which can support and create mechanisms that will aggregate value to the ethanol sales price via the elimination of import duties and consumption taxes, in addition to other incentives that may eventually be available to make the project viable.

From the macroeconomic perspective, the replacement of about 23,400 m per year of imported mogas by the ethanol project means a hard currency savings of G$ 16.85 billion or US$ 83 million on the energy import bill , during the ten years of the project analysis.

The oil market price was considered to be between US$ 60 and US$ 80 per barrel.

Official Cooperation in Guyana Mr. Navin Chandarpal, Presidential Adviser on Sustainable Development. Mr. Mahender Sharma, Guyana Energy Agency, Chief Executive Officer. Mr. Geoffrey Da Silva, Guyana Office for Investment, Chief Executive Officer. Mr. Dhanpaul Dhanraj, Guyana Office for Investment, Investment Officer. Mr. Badrie Persaud, Guyana Oil Company, Chief Executive Officer. Mr. Nick Jackson, Guyana Sugar Corporation, Chief Executive Officer. Mr. Harold B. Davis, Guyana Sugar Corporation, Agriculture Research Director. Mr. Paul Hough, Booker Tate Limited, Skeldon Project Manager.

Special Assistance in Guyana Mrs. Charmaine Gomes, Environmental Affairs Officer, ECLAC Port of Spain Subregional

Headquarters.


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Technical Support Praj Industries Limited, Pune, India.

Feasibility Study Assistance Ricardo Raoni Werlang Prioste, Brazil; Graduation in Economics - University of So Paulo,

Ribeiro Preto, SP, Brazil.

Document Preparation Assistance Vinicius Agostinho da Nbrega - Management Graduation Course, University Baro de

Mau, Ribeiro Preto, SP, Brazil.

ABBREVIATIONS UNITS AND PREFIXES s second W watt h hour kW kilowatt d day kWh kilowatt hour (3.6 mega joule) h/d hour per day MW megawatt h/y hour per year MWh megawatt hour J joule (0.293 cal) m metre kJ kilo joule cm centimetre MJ mega joule mm millimetre V volt m2 square metre kV kilovolt m3 cubic metre Hz hertz m3/d cubic metre per day LV low voltage km kilometre cfu/mg colony forming unit per milligram ha hectare pH acidity-alkalinity scale ppm parts per million L litre M million ml millilitre max maximum L/s litre per second min minimum gal gallon (3.785 L) C

Cal degree Celsius Calorie

Imp. gal Imperial gallon (4.546 L) kcal Mcal

Kilocalorie Mega Calorie

bbl barrel GDP Gross Domestic Product 1 bbl = 158.99 L = 42 gal = 34.97 Imp. gal IRR Internal Rate of Return 1 m3 = 1,000 L = 264.17 gal = 219.96 Imp. gal NPV Net Present Value v/v volume by volume SA Sensitivity Analysis w/w weight by weight DSCR Debt Service Coverage Ratio g gram CAPEX Capital Expenditure kg kilogram OPEX Operational Expenditure mg milligram ERP Enterprise Resources Planning t metric ton G$ Guyanese Dollar t/h metric ton per hour US$ United States Dollar mg/kg milligram per kilogram FOB Free On Board g/L gram per litre FOT Free On Truck


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kg/m kilogram per metre CIF Cost Insurance Freight kg/h kilogram per hour CC Carbons Credit kgf/cm2 kilogram force per square centimetre PLC Programmable Logic Controller kPa kilo Pascal B.O.D. Biochemical Oxygen Demand MPa mega Pascal C.O.D Chemical Oxygen Demand hp horsepower NBR Brazilian Standards FS fermentable sugars ASTM American Society For Testing and Materials Standards VA volatile acid AISI American Iron and Steel Institute Nm/t Normal Cubic Metre per Ton


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I. Introduction

Given the projects location and the fact that sugarcane grows in wet areas, it was necessary to select a proven system to manage properly the distillation and dehydration effluent. This effluent, normally known as vinasse, is generated at high volumes and it can not be disposed of in local water sources. Vinasse has agricultural fertilization properties, and can thus be placed directly on cultivated land via fertigation, in the ethanol-producing countries.

The adopted design specifies equipment to concentrate the vinasse to levels that can then be used as fertilizer, as already installed and in operation in Colombia.

In addition to solving the vinasse issue, this technology also involves adequate and up-to-date parameters for the consumption of molasses, water, steam, energy, and chemicals, and proposes an efficient control and automation system.

The project is designed to be highly efficient overall.


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II. Basic design data and technical criteria

Location The distillery plant is to be located at the Guysuco Skeldon plant, at Skeldon, East Berbice District, Courentyne, region 06.

Latitude: N 52 52 Longitude: W 57 08 The location was picked to make use of the molasses supplied by the Skeldon plant and from

Guysucos other mills in the region. The project envisages a direct pipe connection to the Skeldon plants molasses storage facilities. The site selection was approved by Guysuco.

TABLE 1 PERSONNEL AND SHIFTS

Personnel N Shifts Manager 01 01 Administration chief 01 01 Operation chief 01 01 Quality control chief 01 01 Administration 03 03 Operators 05 15 Maintenance 03 09 Quality control 03 09 Services and security 03 09 Total 49

Source: Prepared by the authors.


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FIGURE 1 PROJECT LOCATION

Source: Google Map.

Note: The boundaries and names shown on this map do not imply official endorsement or acceptance by the United Nations.

Project


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TABLE 2 PLANT CAPACITY

Plant capacity 1 - Nominal ethanol production capacity 120 m3/d 2 - Operation 310 d/y 3 - Time efficiency 95% 4 - Continuous operation (2x3) 294 d 5 - Full production capacity (4x1) 35,280 m3/y 6 - Ethanol per molasses 260 L/t 7 - Molasses required for full capacity(5/6) 135,700 t/y 8 - Molasses availability 90,000 t/y 9 - Ethanol project production(8x6) 23,400 m3 10 - Operation days for production (9/1x3) 206 d/y

Source: Prepared by the authors.

Typical Molasses Specification The exact composition of the molasses is difficult to predict. It is influenced by soil and climatic conditions, variety and maturity of cane and the processing conditions in the factory. For this reason, only ranges with indicative averages of the composition can be given. Dry matter ranges between 74-79%; the analysis below is based on 75%.

TABLE 3 TYPICAL MOLASSES SPECIFICATION

Cane Total Sugars 46-52% Sucrose 30-40% Reducing Sugars 15-20% Unfermentable Sugars 2 - 4% Raffinose Non-Sugar Organic Matter 9-12% Nitrogen components as protein (6.25 * N) 2-3% Betaine Glutamic Acid Non-nitrogen bodies Soluble gums/other carbohydrates Organic acids Crude Ash 8-11% Sodium (as Na) 0.1-0.4% Potassium (as K) 1.5-4.0% Calcium (as Ca) 0.4-0.8% Phosphorus (as P) 0.6-2.0% Chloride (as Cl) 0.7-3.0%

Source: Schuumans & Van Ginneken

Cane molasses contains small amounts of citric acid, succinic acid, waxes, stereols and vitamins. The viscosity of molasses varies widely. It depends on several factors: dry matter, the area of production and temperature.


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TABLE 4 TYPICAL VISCOSITY RANGE OF CANE MOLASSES

Temp. (C) Viscosity Range (centipoises) 10 20.000-40.000 15 10.000-25.000 20 5.000-10.000 25 3.000-5.000 30 2.000-3.000 35 1.500-2.500 40 1.000-2.000

Source: Schuumans & Van Ginneken

Anhydrous Fuel Ethanol Specification Considering that ethanol is a relatively new fuel, there are international standardization committees working to establish the standards for different ethanol grades. Committees from Europe, the United States, and Brazil are working together in a special task force.

The growing global consumption of ethanol as fuel or for industry feedstock requires accurate methodologies for analysis and derived procedures for certification and trading.

The following specifications are the ones recommended by the Brazilian International Trade Association (IETHA).

TABLE 5 SPECIFICATIONS RECOMMENDED BY THE BRAZILIAN INTERNATIONAL

TRADE ASSOCIATION (IETHA) Characteristics Unit

Density @ 20C kg/m max. 790.8 NBR 5992 / ASTM D4052 Alcoholic strength @ 20C %m/m min. 99.5* NBR 5992 / ASTM D4052 Alcoholic strength @ 20C %v/v min. 99.7* NBR 5992 / ASTM D4052 Ethanol Content %v/v min 97.1** ASTM D5501 Water (Karl Fischer) %m/m max. 0.5 ASTM E203 / E1064 Water (Karl Fischer) %v/v max. 0.4 Calculated Total Acidity -max mg/L max. 30 NBR 9866 / ASTM D1613-06 Electrical Conductivity uS/m max. 500 NBR 10547 pHe 6.5 -9.0 ASTM D6423 Copper mg/kg max. 0.07 NBR 10893/ASTM D1688A Chloride mg/kg max. 1 NBR 10894, ASTM D7319-07, ASTM

D7328-07e1 Solvent-washed gum mg/100mL max. 5 ASTM D381 Aspect Clear Visual Methanol %v/v max. 0.5 ASTM D5501 C3-C5 %v/v max. 2.0 ASTM D5501 Sulphur mg/kg max. 10 ASTM D2622, D3120, D5453, D6428 Sulphate mg/kg max. 4 NBR 10894, ASTM D7319-07, D7328-07e1 Non-volatile material mg/L max. 100 ASTM D1353

Source: IETHA International Ethanol Trading Association , Oct 1st 20. * Densimetry ** Chromatography (100 -% water-%methanol -%C3-C5) Calculated = Density @ 20C x water% m/m / 1000


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Process

As described in chapter III.

Equipment

As described in annex A.

Process Quality Control

The distillery is to have its own laboratory and specialized personnel, to keep ethanol specifications according to the established standards. Personnel will control all process segments, utilities, feedstock, chemical inputs, and the legal limitations of the disposal of effluents.

Plant Flexibility

The plant can operate at 70% of nominal capacity and keep the same efficiency. Plant capacity allows for the management of different production risks such as labour strikes,

energy defaults, and the lack of molasses and chemicals, among other things. The plant can produce 35,280 m of ethanol per year if there is a greater availability of

molasses, (approximately 135,700 t/y).

Utilities

Considering the fact that the Skeldon plant cannot supply treated water, steam, electricity, compressed air, quality control services, or even bagasse as a boiler fuel, the distillery project had to specify the necessary equipment in order to produce these required utilities and provide the above-mentioned services.

The capacities and quality specifications were based on the main suppliers process packet requirements, as described in chapter III.

Therefore it was necessary to add a compact boiler, 25 steam t/h, burning biomass fuel (rice waste and/or wood), a turbo-generator that can supply the energy demand, and a water treatment station, with their peripherical and auxiliary installations.

Operation Control and Maintenance

An up-to-date instrumentation and automation system will be provided, which will allow the operators to control the process and utilities operations both on-site and remotely.

The project specifies the adequate facilities for day-to-day operation maintenance and for the storage of spare parts.

Civil Works

All necessary buildings have been included in the project proposal. The technical specifications for site preparation, soil study, piling, and costs were provided by Guysuco, which has recent data related to the execution of the new Skeldon project.

Buildings: Administration


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Maintenance & Warehouse

Quality Control Laboratory & Operation Control Center Social assistance & Amenities

Steam and Power Plant

Ethanol Storage

There will be a 5,000 m3 tank for ethanol storage. An ethanol loading station to fill 30 m3 truck tanks, observing the existing security standards

for the operation, is also specified in the projects plans.

Effluents

The effluents are vinasse, resulting from the distillation process, boiler flue gases, process lees, general used water, laboratory analysis residues, and human waste.

The vinasse requires a special industrial treatment, because of the huge volume produced: it is generated in a proportion of 11 litres of vinasse per litre of ethanol, varying according to the molasses specification. Therefore there will be a daily production of 1,320 m3 of vinasse. According to environmental protection legislation, the vinasse cannot be directly disposed of into the water canal because of its B.O.D and C.O.D content.

A special technology is used by the project to concentrate the solid content of this effluent up to 54-55%. At this concentration it can be used as a component for fertilizer production. As a result, this requires special equipment, installations and utilities inputs to be resolved, and this negatively impacts the feasibility study.

TABLE 6 THE VINASSE OF MOLASSES COMPOSITION

Elements Units Value

N P2O5 K2O CaO MgO SO4 *OM Mn Fe Cu Zn pH

kg/m3 kg/m3 kg/m3 kg/m3 kg/m3 kg/m3 kg/m3 mg/dm3 mg/dm3 mg/dm3 mg/dm3

0.75 - 0.79 0.10 - 0.35 3.50 - 7.60 1.80 - 2.40 0.84 - 1.40 1.50 37 - 57 6 - 11 52 - 120 3 - 9 3 - 4 4.0 - 4.5

Source: CTC Sugarcane Technology Center, Piracicaba, SP, Brazil.

*OM: Organic Material Content.


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III. Engineering Design Basis

The main issue related to the projects technical definition is to establish the adequate quality and quantity parameters to run the process, and to observe the existing operation periods for selecting the required personnel, equipment and installation.

The process will also facilitate a study of the procedures for effluent treatment, which will need to be submitted to the environmental authorities.

The authors researched and concluded that the invited company already had experience in this field in similar scenarios in India, the Caribbean and Latin America. This supplier can provide an invaluable contribution to the project in this regard. The annual operation period for the project has been extended to 310 days per year because there is no process operation connection (utilities) with the Skeldon plant.

The molasses produced by Skeldon and other mills will be stored during the sugar cane milling season, for approximately 180 days.

III.1 Process Ethanol is produced through the fermentation of the molasses in a semi-continuous process. The fermentation is developed in controlled temperature conditions, by the addition of the suppliers selected yeasts.

The water used to dilute the molasses for fermentation requires compatible quality standards. During fermentation there must be continuous bacterial control in order to avoid yeast

infections, which consequently affects efficiency.

The fermentation stage finishes when all fermentable sugars are reduced to almost zero. Thence there is the formation of the wine, which is sent for distillation. The wine contains about 7-9% ethanol.

During distillation the ethanol is separated from the wine and the final product is hydrous ethanol. Hydrous ethanol is continuously sent to the molecular sieves and turned into the final

anhydrous grade ethanol. After cooling, this is sent to the storage tanks. The whole process is performed in a continuous operation, under instrumentation and

automation control systems, which are supervised by quality control personnel.


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The selected process envisages the integration of the different production stages in order to reduce a) steam consumption and, consequently, the necessary fuel (rice, straw, or wood); and b) the volume of the vinasse by evaporation.

The following process stages will provide more accurate information: Semi-continuous fermentation;

Total vacuum distillation;

Molecular sieve dehydration; and

Evaporation of vinasse.

III.2 Raw Material The feedstock specifications were established by information provided by Guysuco and by the suppliers technical background.

It is necessary to adopt average parameters to specify equipment capacities, but always considering the related operational security margins.

The suppliers engineering reports confirmed the yields and the process consumption ratios, such as the daily necessity of 484 tons of molasses to produce 120,000 litres of the specified ethanol, based on the adopted parameters.

TABLE 7 THE PRELIMINARY DESIGN IS BASED ON MOLASSES C

Parameter (% by w/w) Molasses C Fermentable Sugars 44% min. Unfermentable Sugars 3 4% Total Sugars as Invert 47 48% Moisture 18 20% Volatile Acids Less than 6000 ppm Butyric Acid Less than 140 ppm

Source: PRAJ. Note: Requirement of Molasses: 484 t/d (Based on 44% Fermentable Sugars).

III.3 Product The project will produce fuel grade anhydrous ethanol. As mentioned before, the standards for the sale and distribution of this type of fuel are being developed by international committees. Once established, the project will make any needed adjustments to conform to the international standards.

The supplier has offered its ethanol specifications, which are accepted by the market. At this stage of the study the matter is considered acceptable by the authors.

The project contains a complete quality control laboratory network and its required qualified personnel, envisaging continuous ethanol production and storage under the related acceptable standards.


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TABLE 8 FUEL GRADE ETHANOL AS PER ASTM D-4806 Moisture 0.2% v/v or 2000 ppm Other specifications ASTM specifications Methanol 5000 ppm max Solvent washed gums 50 ppm max Chloride ions 40 ppm max Copper 0.1 ppm max Acidity 70 ppm max

Source: American Society for Testing and Materials

Quantity: Capable to produce 120,000 L/d of Anhydrous Alcohol with 0.2% v/v moisture (approx. 99.8% v/v alcohol content).

Concentrated Vinasse after Evaporation: This segment of the process provides the solution to the projects core problem.

Vinasse, the liquid effluent produced during distillation, with an average rate of 11L/ L of ethanol, can not be disposed of into water canals. The B.O.D and C.O.D levels would harm the environment.

Vinasse is the non-alcohol content of the wine to be distilled. Its quality depends directly on the processed molasses contents, which in turn depends on sugar cane quality and sugar production procedures.

The suppliers technology offers an engineering design that is energy efficient and supports the solids concentration of the vinasse by evaporation as mentioned below. The concentrated vinasse can than be used as fertilizer.

TABLE 9 VINASSE PRODUCTION AND SOLIDS CONCENTRATION

Description Specifications Vinasse quantity and solids concentration 360 t/d with 54 ~ 55% w/w solids or

approximately 288 m/d or 2.4 L/L of Ethanol depending upon the exact characteristics of the molasses.

Source: PRAJ.

Note: Solids composition depends on solids in feedstock and quantity of vinasse (stillage) recycled.

Notes:

The specifications of products such as rectified alcohol shall depend on plant operation. The plant is capable of producing desired specifications of spirits by changing its operating parameters.

It is important to have a steady and uninterrupted supply of utilities such as steam and electricity to obtain a uniform and high quality alcohol.

The test methods for detecting any above-mentioned impurities will be as per BP 1993/ASTM D4806 or PRAJ standard analytical manuals.


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III.4 Process Description The main segments of the process (later detailed in this chapter) offered by the supplier are:

Fermentation (Hiferm) At this stage the mash, which is prepared with molasses, water and prepared yeast,

develops a controlled process that transforms the sugar into ethanol. The final product is a wine that has a 7-8% ethanol content, and which will be sent to the distillation columns, to eliminate the non-alcohol content.

The installation has 4 fermentors and offers an efficiency of 88-89% (percentage of fermentable sugars transformed into ethanol).

Distillation (Ecofine- TVS) At this stage the ethanol is separated from the other non-alcoholic content that becomes the vinasse. There is an intense use of steam in this project design, which is generated in house and comes

from the turbo generator. The main technical specs are the use of a vacuum and the heat integration of the suppliers

design. These are the strong points of the suppliers engineering design.

Dehydration (Ecomol-XP) At this stage the hydrous ethanol coming from the columns is processed through a molecular

sieve (MSDH) plant, which also operates with low-pressure steam and with a very small quantity of medium-pressure steam.

The operation extracts water from the feed hydrated ethanol, and than produces the final fuel grade according to the required specifications. The resulting product is then sent to the storage tank.

Vinasse Evaporation (Ecovap-FB) The vinasse is concentrated up to 55% w/w in a combined flubex forced circulation

evaporation system.

The flubex is an installation of 4 stages evaporators. The concentrated vinasse is sent to a storage tank for further processing into fertilizer by third parties. Hiferm Semi Continuous Fermentation.

Molasses Receipt Handling and Storage

The molasses is unloaded into the weighted molasses tank and pumped to two yeast activation vessels and to the four fermentors.

Cell Mass Preparation

During plant start up yeast is propagated in the laboratory. Later, the laboratory grown yeast culture is propagated in (diluted pasteurized media) yeast vessels. Optimum temperature is maintained in the yeast vessel by recirculation of cooling water. A specially designed gas sparger ensures optimum mass transfer for high cell mass generation. The yeast grown in yeast vessels is transferred to the yeast activation vessel using a cell mass transfer pump for further scale up of the cell mass required to start fermentation. Optimum temperature is maintained in the yeast activation vessel by using a dedicated mash cooler. After activation, the activated cell mass is transferred to the fermentor.


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Fermentation

Fresh biomass propagated in the yeast propagation section is seeded in the fermentor. The yeast converts the fermentable sugars into alcohol and carbon dioxide under optimum conditions. As alcohol fermentation is an exothermic process, heat is released during the process. Dedicated forced recirculation coolers for each fermentor cool the mash to maintain the optimum temperature required for yeast activity.

After the reaction is completed, the mash is sent to the mash charger and then to distillation. CO2 scrubbing CO2 produced during fermentation carries with it some entrained alcohol. This CO2 is taken

to a CO2 scrubber where it is scrubbed with water to remove the entrained alcohol. The scrubbed CO2 can then be taken to a CO2 plant or vented out.

Ecofine-TVS Total Vacuum Distillation

The Ecofine-TVS vacuum distillation scheme has all the distillation columns operating under a vacuum. Fermented mash is preheated and fed to the de-gasifying column. Top vapors are fed to the degassifier column while bottom liquid is stripped in the mash column. Heat input is given to the mash column reboiler and vapors from the reboiler are fed to the mash column as a source of energy.

A head cut of 2% can be drawn from the aldehyde column if required. While the bottom of the aldehyde column is sent to an exhaust column.

The vapors of the mash column are fed to the rectifier column, which is also operated under vacuum pressure. The rectifier column vapor is condensed and the condensate is sent back to the column as a reflux. The fusel oil draws are taken out from a few plates above the feed plate and fusel oil is decanted out. Rectified spirit is drawn from the top trays and is sent to the MSDH plant or to storage. Heat input is supplied to the exhaust column through the reboiler assembly. Liquid from the exhaust bottom is sent to the reboiler where vapors are generated and fed back to the exhaust column. The exhaust column reboiler is driven by MSDH vapors.

Ecomol-XP Molecular Sieve Dehydration Plant (MSDH) Rectified spirit containing at least 94% v/v alcohol is pumped from the rectifier draw tank/RS collection tank to the dehydration section. The rectified spirit is preheated in a feed pre-heater with the help of product vapors and then fed to the vaporizer flash tank. The objective of the vaporizer is to evaporate rectified spirit. The vaporizer operates under pressure. Energy is supplied to the vaporizer flash tank by the vaporizer reboiler with low pressure exhaust steam condensing on the shell side. The steam condensate can be recycled back to the boiler.

Overhead feed alcohol vapors from the vaporizer flash tank are then passed through a super heater. Energy for superheating is supplied by medium pressure steam condensation on the shell side of the super heater.

Superheated hydrous alcohol vapors are sent to twin adsorbent beds. The twin adsorbent beds operate in a cyclical manner. Twin beds are provided to allow for bead regeneration in continuous operation. While one bed is in dehydration mode, the other is in regeneration mode. Depending on the feed and product specifications, dehydration-regeneration exchange takes place approximately every few minutes. The feed alcohol vapors are passed through the bed under dehydration mode. The adsorbent bed will absorb moisture present in feed vapors and dehydrated product alcohol vapors (with moisture content less than 0.2%v/v) are obtained from the bottom of the bed.

The product alcohol vapors are then passed through the regeneration pre-heater and feed pre-heater for heat recovery. Condensed alcohol is collected in the product receiver.


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The alcohol from the product receiver is pumped to the product cooler and then sent to the anhydrous alcohol storage.

During regeneration mode, a vacuum is applied to the bed under regeneration. A small amount of product alcohol vapors are purged through the bed in regeneration mode under a high vacuum, to prepare the desiccant for cycle changeover when this bed goes online. The purged alcohol vapors act as a carrier for the removal of moisture from the bed. These alcohol vapors along with moisture are obtained from the top of bed. These alcohol-water vapors (regeneration stream) are condensed in the regeneration condenser, which is attached to a vacuum eductor.

The vacuum is pulled in the system with the help of a vacuum eductor. Regeneration stream is used as motive fluid for the vacuum eductor. The regeneration stream coming from the regeneration condenser is pumped, preheated in the regeneration pre-heater and fed to the rectifier column for the recovery of alcohol.

Moisture present in the feed alcohol is removed from the bottom of the rectifier column in the form of spent lees containing less than 500 ppm of ethanol.

After one cycle is over, the beds are interchanged, that is, the bed on dehydration mode will switch over to regeneration mode and the bed on regeneration mode will switch over to dehydration mode, with the help of an automated system.

Ecovap-FB Evaporator

Effect Combination of Flubex Finisher System on Steam:

There are two stages in the evaporation section. The first stage consists of a two effect falling film evaporator that operates on steam. The second stage consists in a train of four effect flubex followed by a finisher and also operates on steam. The finisher will be a forced circulation type evaporator. For stage one falling film will have one common standby and for second stage forced circulation (Finisher) evaporators will have one standby.

Stage I (2 Effect FF Reboiler) Vinasse from the distillation section will be preheated with steam condensate and then fed to the first falling film effect. Steam will be used as a heat source for first effect evaporation. Steam condensate from the shell of the first effect will be collected in the steam condensate tank in stage two. Water vapors generated from the first falling film effect will be used as a heating source for the second falling film effect. Partially concentrated vinasse will be fed to the second effect. Water vapor generated in the second falling film effect will be sent to the mash column in the distillation section. Condensate generated from the second effect will be collected in the process condensate tank from where it will be sent for further treatment. Partially concentrated vinasse from the reboiler stage will be pumped to the second stage.

Stage II (4 Effect Flubex + Finisher) Partially concentrated vinasse from the first stage is fed to the first effect flubex in the second stage.

Steam will be used as a heating medium for this effect. Steam condensate will be collected in steam condensate tank and will used to preheat the vinasse. After that it will be recycled to the boiler. Vapors generated from the first effect will be sent to the second effect as a heat source. Partially concentrated vinasse will be fed to the second effect flubex. Vapors generated in the second effect will be sent to the third effect and the finisher. Partially concentrated vinasse will be fed to the third effect flubex. Vapors generated in the third effect will be sent to the fourth effect and partially concentrated vinasse will be send to the fourth effect Flubex. Vapors generated in the fourth effect will be condensed in a surface condenser followed by a vent condenser. Partially concentrated vinasse will be


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fed to the finisher where it will be concentrated up to 54~55% w/w. Vapors generated in the finisher will also be condensed in the same condenser. Process condensate generated from the second, third, and forth effects, the condensers and the finisher will be collected in the process condensate tank and will be sent for further treatment. The necessary vacuum will be created by a water ring vacuum pump. Concentrated vinasse from the finisher will be collected in a concentrated syrup tank and then will be sent for further treatment or storage.

III.5 Input Requirements The following inputs, classically known as utilities, are the basic support to run the process.

The specified necessities support the engineering design. Furthermore they are a relevant part of the ethanol production cost estimate.

TABLE 10 UTILITIES AND CHEMICALS

Process Water

Fermentation 1235 ~ 1245 m/d Cooling water circulation rate

Fermentation 1350 Mcal/h Distillation 4520 Mcal/h Dehydration 1600 Mcal/h Evaporation 7720 Mcal/ h

Electricity

All figures are approximate Operating Connected For Fermentation 210 - 220 kW 290 - 300 kW For Distillation 40 - 50 kW 75 - 85 kW Dehydration 25 - 30 kW 48 - 58 kW For Evaporation 740 - 760 kW 980 - 1000 kW

Steam for:

Distillation, Dehydration including integrated evaporation at 1.5 kgf/cm

** 284 t/d or 11.8 t/h. (2.38 kg/L of Fuel Ethanol)

Dehydration at 3.5 kgf/cm 6 t/d or 0.25 T/h (0.05 kg/L of fuel ethanol) Stand Alone Evaporation at

1.5 kgf/cm for 36650 kg/h water evaporation rate

298.2 t/d or 12.43 t/h (2.48 kg/L of fuel ethanol)

Instrument air:

Fermentation 50 - 60 Nm/t Distillation 70 - 80 Nm/t Dehydration 40 - 50 Nm/t Evaporation 70 - 80 Nm/t Cleaning / sealing water As necessary Ammonium Sulfate / Urca /

DAP - For Fermentation 240 - 300 kg/d - to be confirmed after analysis of nitrogen content of molasses

Sulphuric Acid - For Fermentation

240 - 360 kg/d approximately - to be confirmed after molasses analysis

Antifoam Agent Sulfonated castor oil (turkey red oil). Consumption will depend on type of anti foam being used

Source: PRAJ. Notes: - Electricity consumption figures depend upon the final layout, pipe routing, and the efficiency of the pumps. - If the FAN content of the molasses is less than 0.5% w/w, the additional nitrogen required would be

supplemented by using ammonium sulphate, apart from DAP.


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- The above parameters are indicative and the exact parameters can be confirmed only after analysis of molasses-C samples and after detailed engineering.

- Process water should be filtered potable water and shall not contain any E. COLI or COLIFORM bacteria with total the germ count being limited to 60 Nos/ml. The chloride content shall be less than 25 ppm.

III.6 Other Operating Parameters These parameters come from the intermediate process and utilities items which are reutilized or reprocessed within the continuous operation. These inputs are also basic for the detailed engineering design of the plant.

TABLE 11 LEES AND STEAM CONDENSATE

Parameters

Spent lees generated 160 - 170 m/d (to be sent for treatment). Steam condensate

generation 540 - 550 m/d (to be sent back as boiler feed water).

Process condensate generated

1095 m/d (to be sent for treatment).

Source: PRAJ.

III.7 Specifications of Inputs This section specifies the basic utilities, the chemicals used by the process, and the effluents. It also remarks on matters related to norms and efficiencies.

Furthermore the main mechanical, hydraulic, ground and climate impacts or specs are referred to in order to establish the limits of liability and compliance with applicable standards.

Molasses-C Molasses-C should be free from caramelisation products and known inhibitory elements of

yeast metabolism, such as lead and arsenic polyelectrolytes or microorganisms producing side products. The molasses-C will have:

TABLE 12 MOLASSES-C QUALITY PROCESS SPECIFICATION

Fermentable sugars 44% (w/w) min F/N Ratio Min 1.2 Sulphated ash Max 15% (w/w) Organic Acids Max. 4000 ppm Bacterial content Max. 1000 cfu/mg Caramel content < 0.3 absorbance at 375 Nm Butyric Acid content 140 ppm max FAN Content 0.5% w/w min

Source: PRAJ.


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Process Water Process water should be filtered, potable and shall not contain any E. COLI or COLIFORM

bacteria with the total germ count limited to 60 Nos/ml. The chloride content shall be less than 25 ppm. Cooling Water For Circulation Cooling water should be at a temperature of 32 C maximum and 2.5 kg/cm pressure, with a

total hardness of 500 ppm total dissolved solids of 3000 ppm. The cooling water shall be available at constant pressure at cooling water headers in the fermentation section.

Sulphuric Acid Concentrated, Commercial Grade, Composition as below value in % w/w

Sulphuric Acid : 98 min Lead : 0.001 max Arsenic : 0.0001 max Iron : 0.03 max Moisture : 2 max

Diammonium Phosphate (D A P) In the form of granules. Composition as below. Values in % w/w

P2O5 : 50 min Nitrogen : 20 min Arsenic : 0.0001 max Iron : 0.01 max Lead : 0.001 max

Antifoam Turkey red oil. Composition as below, Value in % w/w

Degree of sulphation : 50 min Total alkali (KOH) : 20 min Total fatty matter : 0.0001 max Total Ash : 0.01 max pH : 0.001 max

Steam for Fermentation and Distillation Dry, saturated steam should be provided at the respective steam header in the plant. The

maximum variation in the steam pressure shall not be more than +/- 1.0 kgf/cm. The steam supply during the fermentation process and for steaming of equipment can be at 1.0 kgf/cm.

Distillation: Minimum pressure of steam: 1.5 kgf/cm. Dehydration: Minimum pressure of steam: 1.5 kgf/cm. for vaporizer Minimum pressure of steam: 3.5 kgf/cm. for sper heater Evaporation: Minimum pressure of steam: 1.5 kgf/cm.


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Instrument Air Compressed, dry and oil free air should have a pressure of 7.0 kgf/cm with a dew point of (-) 40 C. Vinasse (stillage) For Evaporation Vinasse solids : 12 13 % w/w total solids Vinasse temperature : 37 38C Vinasse pH : 4.0 4.5

Electric Power For all motors: 480 +/- 5 % V, 3 phase, 60 Hz supply, 4 - wire supply. For control system: 120 V, 60 Hz (+3), 1-phase, 2-wire supply. Performance Parameters Norms The unit design shall meet the local applicable codes for this type of operation. The supplier

will demonstrate the units capability to achieve the key process objectives to include the ethanol production rate, product ethanol specifications, and other key process objectives as outlined herein.

Capacity of plant The plant has a capacity of 120,000 L/d of anhydrous ethanol with 0.2% v/v moisture

(approx. 99.8% v/v ethanol content) at a steady state. Yield of Alcohol Performance norms for various raw materials having a volatile acid content less than 5000 ppm.

TABLE 13 EFFICIENCIES ACCORDING TO VOLATILE ACIDS VARIATION IN MOLASSES-C

Raw Material Overall Efficiency (Fermentation + Distillation + Dehydration) at different volatile acids in Molasses-C:

Molasses C

87.7% when VA of Molasses C < 5000 ppm

86.33% when VA of Molasses C > 5000 ppm & < 7000 ppm

85.35% when VA of Molasses C > 7000 ppm & < 9000 ppm

Source: PRAJ. Notes: For the molasses C with VA of 9000 to 11,000 ppm, the fermentation efficiency will be 86%.

The butyric acid content of molasses C should be less than 140 ppm. Molasses C should also be free from any caramelized products that inhibit yeast activity.

Yield: Based on the above the exact yield of alcohol per t of raw material is as follows: TABLE 14

YIELDS OF ETHANOL PER TON OF MOLASSES-C FS % w/w in Raw Material Yield of Alcohol in litre of 99.8%

v/v t of raw material Raw Material consumed for 120,000 L/d of 99.8% v/v alcohol

Molasses C: 44%w/w F.S. 245.10 - 247.80 484.3 - 489.6 Molasses C: 46%w/w F.S. 256.25 - 259.13 463 - 468.3

Source: PRAJ.


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Steam consumption for Plant Capacity of 120,000 L/d of Anhydrous Ethanol Steam for:

Distillation, Dehydration including integrated evaporation at 1.5 kgf/cm : 284 t/d or 11.8 t/h (2.38 kg/L of fuel ethanol)

Dehydration at 3.5 kgf/cm : 6 t/d or 0.25 t/t (0.05 kg/L of fuel ethanol) Stand Alone Evaporation at 1.5 kgf/cm

for 36650 kg/h water evaporation rate. : 298.2 t/d or 12.43 t/h (2.48 kg/L of fuel ethanol)

Mechanical design basis For the design of static equipment such as distillation columns, condensers, reboilers, and

tanks, among others, the following factors have been taken into consideration: Wind Velocity = 100 km/h

Seismic coefficient = Zone 2 (High Risk-0.15 G Acceleration) However, in case the seismic factor is higher, the structure on which the equipment is

supported will have to be designed for a higher factor.

All equipment excluding columns will be supported laterally to the structural members; the direct load due to wind and seismic forces has not been considered. All tanks and vessels will be supported/rested on existing foundations. All columns will be self-supporting.

The construction material for the equipment will be specified as per ASTM 240 for stainless steel sheets and coils.

The construction material for all body flanges and bolts will be carbon steel (CS) and the gaskets will be EPDM.

All pressure vessels such as distillation columns and condensate pots, among others, will be generally designed as per Good Engineering Practices of PRAJ.

All shell and tube type heat exchangers will be generally designed as per Good Engineering Practices of PRAJ.

Hydro testing of critical equipment wherever applicable will be carried out at the Praj fabrication facility before dispatch.

Piping and valves will be specified as per ANSI standards.

The safe bearing capacity of soil in the area under consideration = 20 - 22 t/m. Note: If the seismic factor changes, the cost and structural thickness of the equipment will change.


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IV. General Investment Items

This chapter identifies the main items needed for the project, which weere reasonably assessed through specific research procedures for the investment cost estimate.

It comprises licenses, services, equipment, installations, civil works and vehicles. Permits

Project Management Organizational, Management and Legal Expenditures Pre-Operational Tests and General Cleaning

Terrain and Soil Preparation

Piling and Structural Bases

Pavement, Parking, and Rainfall Water Drainage Fencing

Buildings

Internal Illumination

Topography

Transportation

Erection on Site

Quality Inspection Molasses Piping Connection to the Skeldon Plant

Molasses Tank

Treated Water Tank Water Treating Station

Fermentation Vats/Steel Structures, etc

Yeast Treatment Cubes Wine Tank - Ethanol Storage Tank Distillation Plant

Dehydration Plant


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Vinasse Concentration Plant

Ethanol Truck Loading Station Miscellaneous Tanks

Chemicals and Nutrients Storage Tanks

Inlet Water Pumping Station

Steam Generation

Power Generation

Electrical System

Fire Protection and General Security Systems Piping and pipe racks

Process Screens and Filters

Thermal Isolation Applications

Painting

Laboratory Equipments and Instruments

Furniture, Utensils, Communications, Informatics and Disposal

Vehicles


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V. Basic Layout and Site Location

The concept for the site location was based on the assessment of the existing Skeldon plant facilities, its molasses storage unit location and its expansion program.

The project location within the Skeldon plant layout optimizes the shipment of the molasses. The study also offers an alternative for the location, as shown in V.2. This second location

would leave more space for the Skeldon mill expansion, when considering that the mill will only supply the molasses and not the utilities. This issue will depend on final approval by Guysuco.

The project layout concept is based on the inputs/outputs logistics and by the process, utilities and effluent flow sheets.

Different areas within the layout are basically for: a) social, administration, services and quality control; b) boiler biofuel yard, power plant,

water treatment, process and utilities tanks; c) fermentation, distillation, dehydration and evaporation units; and d) ethanol storage tank and truck loading station.


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FIGURE 2 BASIC LAYOUT

Block Description Block Description 1 - Gate 12 - Ethanol storage tank 2 - Administration 13 - Ethanol truck loading station 3 - Social Assistance and Amenities 14 - Chemical storage tanks 4 - Maintenance warehouse 15 - Chemicals warehouse 5 - Quality control laboratory 16 - Fire protection central station 6 - Molasses storage tank 17 - Electric energy gate 7 - Inlet water storage tank 18 - Effluent treatment plant 8 - Water treatment station 19 - Auxiliary oil tank 9 - Treated water storage tank 20 - Steam and power plant 10 - Fermentation 21 - Fuel biomass storage/handling 11 - Distillation, dehydration 22 - Water pumping station 23 - Yeast preparation plant

Source: The Authors, July 2008.

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FIGURE 3 SITE LOCATION

LAYOUT REFERENCE DRAWING

Source: Prepared by the authors. Note: Basic layout drawing by Guysucos Skeldon Engineering.


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FIGURE 4 SITE LOCATION AERIAL VIEW

Source: Prepared by the authors, July 2008.


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VI. Economical - Financial Analysis

The scope of the study is to assess the Internal Rate of Return (IRR), the Net Present Value (NPV) and the different possible scenarios though the Sensitivity Analysis (SA).

The first stage was to determine the possible ethanol consumption volumes, using data provided by the Guyana Energy Agency and from the authors experience.

A 2.5% annual increase was included to account for economic growth during the project period. The ethanol production was fixed at 23,400 m3 per year because the molasses availability is

also fixed at 90,000 t/y. A methodology was defined for the project ethanol price, taking into account the historical

mogas CIF prices and the estimate of future oil prices, as demonstrated at VI.2. Table 20 shows all the considered inputs for the calculation, which are derived from the

technical project and from the historical official data. It shows a negative percentage of minus 23.60% and an NPV of minus US$ 21.94 million, which determines that the enterprise is not feasible.

Tables 21 through 25 contain the linked and crossed calculations that converge to the IRR and NPV values.

Table 26 assumes variations of plus to minus 10% and 5% on a) ethanol price, b) molasses price and c) investment. Tables 27, 28, and 29 show the respective cash-flow calculations.

Table 31 demonstrates that, within this broader approach, it is still an interesting project to be considered, because in 13 years, beginning at the zero point, the country could save up to US$ 83 million.

Reference: US$ 1= G$ 203.


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VI.1 Guyanas Ethanol Demand Estimate TABLE 15

PETROLEUM CONSUMPTION (1,000 IMP. GAL) Year 2000 2001 2002 2003 2004 2005 2006 2007 Mogas 24 764 25 562 25 572 25 085 26 143 25 495 25 192 27 205 Gasoil 68 064 67 516 66 534 62 644 67 407 63 792 55 641 64 813 Jet A-1/Kero 8 411 6 914 7 018 6 937 6 513 6 518 5 654 6 141 Fuel oil 32 969 30 633 32 301 40 456 31 517 23 684 19 899 32 654 Avgas 477 231 251 301 285 205 352 307 L.P.G 2 568 3 250 3 509 3 773 4 589 4 319 4 470 3 814 TOTAL 137 253 134 107 135 186 139 197 136 454 124 014 111 209 134 933 % Mogas* 3.2% 0.0% -1.9% 4.2% -2.5% -1.2% 8.0% % TOTAL* -2.3% 0.8% 3.0% -2.0% -9.1% -10.3% 21.3%

Source: Guyana Energy Agency. Note:* % = Percentage Growth.

TABLE 16 GROWTH OF GROSS DOMESTIC PRODUCT (1.000.000)

2000 2001 2002 2003 2004 2005 2006 2007 GDP (G$) 108 087 112 219 117 762 123 261 130 405 137 633 154 000 171 190 GDP (MUS$)

533 553 580 607 642 678 759 843

% GDP - 3.8 4.9 4.7 5.8 5.5 11.9 11.2

Source: Bureau of Statistics of Guyana. TABLE 17

PROJECT GENERAL DATA Year* 3 4 5 6 7 8 9 10 11 12 13

Mogas Consumption (m) (+ 2.5%/y)

136 513 139 926 143 424 147 010 150 685 154 452 158 313 162 271 166 328 170 486 174 748

Molasses (t) 90 000 90 000 90 000 90 000 90 000 90 000 90 000 90 000 90 000 90 000 90 000 Ethanol Production (m3) 23 400 23 400 23 400 23 400 23 400 23 400 23 400 23 400 23 400 23 400 23 400 Ethanol Production (1.000 Imp. Gal)

5 147 5 147 5 147 5 147 5 147 5 147 5 147 5 147 5 147 5 147 5 147

Mixture (%)

17.14 16.72 16.32 15.92 15.53 15.15 14.78 14.42 14.07 13.73 13.39

Source: The Author. Note: Project year 3 eventually corresponds to 2011.


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VI.2 The Ethanol Sales Price Definition TABLE 18

MOGAS AVERAGE CIF PRICES 2000 2001 2002 2003 2004 2005 2006 2007 US$/L 0.252 0.230 0.227 0.282 0.350 0.464 0.537 0.581 US$/Imp. Gal 1 145 1 047 1 030 1 284 1 590 2 107 2 439 2 642 % -8.6% -1.6% 24.6% 23.9% 32.5% 15.7% 8.3%

Source: Guyana Energy Agency.

TABLE 19 ETHANOL WORLD MARKET PRICES

2005 2006 2007 2008 Brazil (US$/Imp. Gal) 1.83 2.07 1.86 2.20

Source: CEPEA/ESALQ/Brazil. Note: USA: See Annex B - Figure B9.

Price Establishing Methodology

The ethanol FOB project price is calculated at 70% of the CIF mogas price, which depends directly on the petroleum price and its supply logistics.

The recent global economic crisis has distorted most of the international markets and as a result, the authors have set the ethanol price over the price of a barrel of petroleum of approximately US$ 70.

This seems to be a reasonable price for petroleum in the long term, when the world economy returns to its normal standards.

It is estimated that the mogas C.I.F price is US$ 760 per m or US$ 3.45550 per imperial gallon (G$ 701.36 per imp. gallon) in Guyana. Therefore the ethanol project price is considered to be 70% of that price, US$ 0.53 per litre or US$ 2.41 per imp. gallon. This value corresponds to G$ 107.59 per litre or G$ 489.10 per imp. gallon.

Economic-financial analysis

The economic-financial analysis evaluates the projects viability. For this purpose, three main parameters are used, the Internal Rate of Return (IRR), the Net Present Value (NPV) and the Sensitivity Analysis (SA):

IRR: The Internal Rate of Return is a capital budgeting parameter used to check the efficiency of an investment. It is the rate that makes the Net Present Value of all cash flows equal to zero. The project is a good investment if the IRR is higher than the interest rate used that would be earned if the capital was invested in another project.

NPV: The Net Present Value is a capital budgeting parameter used to check the magnitude of an investment. It consists of the present value of cash flows, comparing the time value of the money. If the NPV is higher than 0 the project is a good investment.

SA: The Sensitivity Analysis is used to determine how variations in the data used for a study weighs more on its conclusions. It is a way to predict the outcome of a decision if a situation turns out to be different from the key prediction.


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TABLE 20 ASSUMPTIONS

Abbreviations Product and Operation Criteria VAT Value Added Tax 1. Product: Anhydrous Ethanol Imp. Gal Imperial Galloon Specifications: y Year - Maximum acidity (mg/L) 30 d day - Maximum conductivity (micro Siemens) 500 tm ton of molasses - Specific weight (kg/m3) 791.5 Eth Ethanol - Ethanol by weight (%) 99.3 IRR Internal Rate of Return 2. Mogas Consumption (2007) NPV Net Present Value 2.1 Imp. Gals (thousands) 27,205 WK Working Capital 2.2 Litres (thousands) 123,674 EBITDA 2.3 Yearly Growth rate (%) 2.5 3. Feedstock for Ethanol Production

Earnings Before Interest, Tax, Depreciation and Amortization

3.1 Molasses Unity 3.2 Specifications: m3 Cubic meter - Brix: 83.2 l Litre - Purity: 35 t ton 3.3 Molasses per year (000 t) 90 mg/L milligram per liter 4. Ethanol per Molasses kg/m3 kilogram per cubic meter 4.1 Litres/ton 260 Financial 4.2 Imp Gals/ton 57 Interest Rate (%) 7.5 5. Litres per Imp. Gal 4.54609 Grace Period (y) 2 6. Operation days per year 310 Tenor (y) 10 7. Ethanol Blend (%) 17.14 VAT (%) 16 8. Plant Capacity Working Capital (d) 60 8.1 Plant Maximum Capacity (m3/d) 120 Fees on Bank Guarantee (%)

1.5 8.2 Plant Maximum Capacity (1000 Imp. Gals/y)

8,183

Market $/Imp Gal 8.3 Plant Operational Capacity (m3/d) 114 Guyana 2.41 8.4 Plant Operational Capacity (1000 Imp.

Gals/y) 7,774

Brazil 2.35 9. Plant Utilities US 2.84 9.1 Steam, own generation (fuel; wood

chips/rice straw) (t/h) 25.00

9.2 Process water, treated, own plant (m3/h) 50.00 9.3 Cooling water, untreated, from existing canal NA 9.4 Electric energy, own plant (kW) 2,000

Source: Prepared by the Authors.


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Revenue and costs

This table shows the yearly costs and revenues of the plant, obtaining the EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) which is the companys raw income.

In the table there are also yearly data about the estimated ethanol consumption, the plants ethanol production capacity and the molasses consumption. These data show when the plant has production higher than demand, creating the possibility of exportation, or also when the molasses provided by Skeldon is not enough for the plant to operate at full capacity. The table also shows the working capital loan schedule.

For operational purposes it was established that the plant will use all the molasses Skeldon can provide, which will lower the ethanol blend year by year because the mogas consumption is increasing and the ethanol production is constant (due to the molasses constraint).

Disbursement Schedule

The disbursement table identifies the different items of the investment, pointing out the value to be paid and the period when the items should be purchased or executed. Interest is calculated during the projects construction. This interest shall be paid during the construction period.

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TABLE 21 REVENUE AND COSTS (000 US$)

Discrimination 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Mogas Consumption Per year (m) 126 766 129 935 133 183 136 513 139 926 143 424 147 010 150 685 154 452 158 313 162 271 166 328 170 486 174 748 179 117 Mogas Consumption Per year (000 Imp. Gal) 27 885 28 582 29 296 30 029 30 779 31 549 32 338 33 146 33 975 34 824 35 695 36 587 37 502 38 439 39 400

Ethanol Production Capacity (m) - - 23 400 23 400 23 400 23 400 23 400 23 400 23 400 23 400 23 400 23 400 23 400 23 400

Ethanol Production Capacity (000 Imp. Gal) - - 5 147 5 147 5 147 5 147 5 147 5 147 5 147 5 147 5 147 5 147 5 147 5 147

Molasses Consumption per Year (t) 90000 90000 90000 90000 90000 90000 90000 90000 90000 90000 90000 90000

Ethanol Blend (%) 17.14 16.72 16.32 15.92 15.53 15.15 14.78 14.42 14.07 13.73 13.39 13.06

Project Years 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Revenues Ethanol Sales (US$) 12 405 12 405 12 405 12 405 12 405 12 405 12 405 12 405 12 405 12 405 12 405 12 405 Costs US$/L Molasses 0.3270 7 652 7 652 7 652 7 652 7 652 7 652 7 652 7 652 7,652 7,652 7,652 7,652 Energy (steam and electric power) 0.0883 2 067 2 067 2 067 2 067 2 067 2 067 2 067 2 067 2 067 2 067 2 067 2 067 Chemicals 0.0303 709 709 709 709 709 709 709 709 709 709 709 709 Wages 0.0097 227 227 227 227 227 227 227 227 227 227 227 227 Maintenance 0.0082 192 192 192 192 192 192 192 192 192 192 192 192 Other Fixed Costs 0.0051 119 119 119 119 119 119 119 119 119 119 119 119 Total Costs 0.4686 10 966 10,966 10 966 10 966 10 966 10 966 10 966 10 966 10 966 10 966 10 966 10 966 Ebitda 1 439 1 439 1 439 1 439 1 439 1 439 1 439 1 439 1 439 1 439 1 439 1 439 Working Capital Loan Days of WK 60 Interest 9% Equivalent Amount 1 803 1 803 1 803 1 803 1 803 1 803 1 803 1 803 1 803 1 803 1 803 1 803 Interest Payment 162 162 162 162 162 162 162 162 162 162 162 162


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TABLE 22 DISBURSEMENT CRONOGRAM (000 US$)

Year 1 Bimesters

Year 2 Bimesters

Item Discrimination

1 2 3 4 5 6 7 8 9 10 11 12

TOTAL

1 Studies and projects 50 1.1 Permits 50 50

2 Pre operational expenditures 800 2.1 Project Management 60 60 60 60 60 60 60 60 60 60 60 660 2.2 Organizational, Controlling and Legal Expenditures 80 80 2.3 Pre Operational Tests and General Cleaning 60 60

3 Civil works 1 075 3.1 Terrain and Soil Preparation 60 60 120 3.2 Piling and Structural Bases 75 75 75 75 75 75 450 3.3 Pavement, Parking and Rainfall Water Drainage 70 70 70 210 3.4 Fencing 30 30 3.5 Buildings 5 90 90 185 3.6 Internal Illumination 20 30 30 80

4 Services 1 030.5 4.1 Topography 40 40 4.2 Transportation 0

4.2.1 Personnel 4 4 8 8 8 8 8 8 8 8 8 8 88 4.2.2 Equipment 31.3 31.3 31.3 31.3 31.3 31.3 31.3 31.3 250

4.3 Erection on Site 62.5 62.5 62.5 62.5 62.5 62.5 62.5 62.5 62.5 562.5 4.4 Quality Inspection 10 10 10 10 10 20 20 90


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TABLE 22 (CONTINUED) Year 1

Bimesters Year 2

Bimesters Item

1 2 3 4 5 6 7 8 9 10 11 12

TOTAL

5 Facilities and equipment 4 902 5.1 Molasses Piping Connection to the Skeldon Plant 50 50 40 140 5.2 Molasses Tank 25 25 25 75 5.3 Treated Water Tank 50 50 50 150 5.4 Water Treating Station 37 37 38 112 5.5 Fermentation Vats/Steel Structures, etc 100 100 75 75 75 75 500 5.6 Ethanol Storage Tank 150 150 150 150 600 5.7 Ethanol Truck Loading Station 160 160 5.8 Miscellaneous Tanks 40 40 80 5.9 Chemicals and Nutrients Storage Tanks 120 120

5.10 Inlet Water Pumping Station 90 90 5.11 Steam Generation 150 150 75 75 450 5.12 Power Generation 250 200 200 200 850 5.13 Electrical System 62.5 62.5 62.5 62.5 250 5.14 Fire Protection and General Security Systems 100 100 200 5.15 Piping and pipe racks 62.5 62.5 62.5 112.5 300 5.16 Process Screens and Filters 30 20 20 20 90 5.17 Thermal Isolation Applications 75 75 150 5.18 Painting 140 140 280 5.19 Laboratory Equipments and Instruments 40 40 40 120 5.21 Furniture, Utensils, Communication, Informatics and

Disposal 30 70 100

5.22 Vehicles 20 65 85 6 PRAJ Equipment, Components, Services, etc. 9 360

6.1 CIF Georgetown 3 213 1 377 1 469 1 469 1 652.4 9 180 6.2 Services 20 20 20 20 20 20 20 20 20 180

7 Contingencies (3%) 98 6 18 49 10 68 14 77 30 36 55 56 517 Total 3 375 210 626 1 698 329 2 318 485 2 642 1 019 1 230 1 882 1 919 17 734 Accumulated debt 3 375 3 585 4 212 5 910 6 239 8 557 485.4 3 127 4 147 5 376.9 7 258.5 9 177 9 177 Interest during implementation 685 734 1 419 Source: Prepared by the Authors.


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Capital expenditures

The Capital Expenditures table lays out the expenditures for the industrial site, as well as the depreciation and amortization schedules.

Depreciation is calculated dividing the value of the depreciating items by the time (in years) that they will take to fully depreciate. The amortization is calculated dividing the total investment amount by the tenor (length of time until the loan is due). Consequently, the yearly amortization has the same value during the repayment period. The interest on the amortization is calculated over the amount that is outstanding. The sum of the amortization payments and the interest expenses are the total annual payment for the capital expenditures.

Cash Flow

The Cash Flow table shows the projects receipts, consisting of the EBITDA minus loan and interest repayments.

In the first ten years of operation the projects cash flow is always negative. This fact is reflected by the Internal Rate of Return: - 23.62% (an acceptable IRR would be 7.5%, the interest rate that the invested money would receive if it was used for another purpose). The Net Present Value is US$ 21.94 million when the minimum acceptable value should be US$ 0 (the company would be able to pay for all its liabilities by itself, acquiring no additional debts). These values demonstrate that under the given parameters the project is not profitable and therefore not feasible from the financial point of view.

Income Statement

The Debt Service Coverage Ratio (DSCR) is found in the income statement. The DSCR is a measure that indicates if the amount of cash flow available is sufficient for the

company to pay its annual interest and principal repayments. The DSCR should be over 1. In this case, the DSCR is below 1 in the first ten years, showing that in these years the enterprise

cannot pay its debts with its own net income and will have to use other funds to continue its activity.

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TABLE 23 CAPITAL EXPENDITURES (000 US$)

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12

Discrimination

Years to depreciate 1 2 3 4 5 6 7 8 9 10 11 12

Pre Operational Tests and General Cleaning 5 0 62 Terrain and Soil Preparation 10 124 0 Piling and Structural Bases 10 155 309 Pavement, Parking and Rainfall Water Drainage 5 0 216 Fencing 5 31 0 Buildings 10 0 191 Internal Illumination 10 0 82 Molasses Piping Connection to the Skeldon Plant 10 0 144

Molasses Tank 10 0 77

Treated Water Tank 10 0 155 Water Treating Station 10 0 115

Fermentation Vats/Steel Structures, etc 10 103 412

Ethanol Storage Tank 10 464 618

Ethanol Truck Loading Station 10 0 165 Miscellaneous Tanks 10 0 82

Chemicals and Nutrients Storage Tanks 10 0 124

Inlet Water Pumping Station 5 0 93 Steam Generation 10 309 155 Power Generation 10 464 412

Electrical System 5 64 258 Fire Protection and General Security Systems 5 0 206 Piping and pipe racks 5 0 309

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TABLE 23 (CONTINUED) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Discrimination Years to

depreciate 1 2 3 4 5 6 7 8 9 10 11 12

Process Screens and Filters 5 0 93

Thermal Isolation Applications 5 0 155 Painting 5 0 288 Laboratory Equipment and Instruments 5 0 124 Furniture, Utensils, Communication, Informatics and Disposal

10 31 72

Vehicles 5 88 0 PRAJ Equipments and Components 10 4 728 4 728

TOTAL 6 560 9 645 10 Year Items 10 6 376 7 840

5 Year Items 5 183 1 803

Total 6 559 9 643

Depreciation Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 10 years items

Ethanol 1 422 1 422 1 422 1 422 1 422 1 422 1 422 1 422 1 422 1 422

Beginning Balance 14 216 12 794 11 373 9 951 8 530 7 108 5 686 4 265 2 843 1 422

Ending Balance 12 794 11 373 9 951 8 530 7 108 5 686 4 265 2 843 1 422 0 5 years items Ethanol 397 397 397 397 397 0 0 0 0 0

Beginning Balance 1 985 1 588 1 191 794 397 0 0 0 0 0

Ending Balance 1 588 1 191 794 397 0 0 0 0 0 0

Total 1 819 1 819 1 819 1 819 1 819 1 422 1 422 1 422 1 422 1 422

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TABLE 23 (CONCLUDED)

Months Disbursement 1-6 7-12 13-18 19-24 Total

% 23.7% 24.5% 23.4% 28.4% 100% To be disbursed 4 212 4 345 4 147 5 030 17 734


TABLE 24 AMORTIZATION SCHEDULE

(000 US$)

Discrimination Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12

Debt BB 0 0 17 734 15 961 14 187 12 414 10 640 8 867 7 094 5 320 3 547 1 773 Amortization 0 0 1 773 1 773 1 773 1 773 1 773 1 773 1 773 1 773 1 773 1 773

Debt EB 0 0 15 961 14 187 12 414 10 640 8 867 7 094 5 320 3 547 1 773 0

Interest Expenses 0 0 1 419 1 277 1 135 993 851 709 567 426 284 142 Total Payment 0 0 3 192 3 050 2 908 2 767 2 625 2 483 2 341 2 199 2 057 1 915


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vvv.pdf

Documents

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united nations publication