The Mozambique Case
This template aims to translate the Nationally Determined Contribution (NDC) of the countries that signed the Paris Climate Change accord into a coherent investment agenda for the more vigorous fund and technological resource mobilization purposes. This undertaking was first thought of in November 2016, just right before Fiji would assume the presidency of the 2017 UN Framework Conference on Climate Change (UNFCCC). In line with this opportunity, this undertaking considers of using the national agriculture sector policy agenda that I prepared for Fiji as the baseline for a climate change national investment agenda model. The climate change investment agenda I envision would be then worthy of international attention and Fiji would play a more meaningful historical role in the Paris accord. However, my initiative stopped because the preparation of the Fiji NDC is still underway.
After 4 years, my interest is again rekindled upon learning that Fiji, and another country, Mozambique, have received external technical assistance aimed at translating their respective NDCs submitted to the Paris accord into financially viable enterprises for investment. For Mozambique, Enabel, the Belgian development agency that executes the Belgian governmental cooperation, and for Fiji, the World Resources Institute, based in Washington DC, are in the course of developing financial models and national capacity enhancement. Inspired by these separate initiatives, it would be timely to go back to what I have conceptualized four years ago, and in the process, I decide to prepare a template for a climate change-focused undertaking. The main agenda is towards the fund and technological resource mobilization with built-in national capacity enhancement and investment campaign.
Mozambique then serves as the better country case because of its two defined topographical zones cut by the Zambezi River. Within the country’s geography, there are ecosystems that can provide a wider spectrum for demonstrating an inclusive national climate change investment agenda. These are the country’s river basins, highland, coastal marine, lake, and a small group of islands ecosystems. Therefore, this template highlights the significance of understanding the geography of any country in the development of the climate change investment agenda.
The template outlines the approaches to be followed in formulating the national climate change investment agenda with built-in capacity enhancement and investment campaign. First, it maps-out the climate change investment projects using a matrix for project identification with vertical and horizontal axes integration. Then, with reference to the document “Business Models for Collective Governance” that I prepared, projects are mapped-out. Financial models of the identified projects for investment are then developed with accurate planning cost standards. It then aligns the NDC by incorporating it into the development plans of line agencies. The template then coordinates development partner support, and finally, it builds a structure for inter-agency collaboration by the establishment of a national climate change investment fund.
The template also provides an outline for reporting, publication, and training purposes. Based on this outline, the template can be converted into a published document for funding negotiation, investment campaigns, and case study training materials. A training manual on capacity enhancement for fund and technology resource mobilization can also be derived from this template. Finally, the development of a national investment agenda for climate change can be a popular and timely development reform.
The Importance of Building National Capability In Project Development and Capital and Technological Resource Mobilization
My interest in the development of a template for a national climate change agenda started in November 2016 just before Prime Minister Voreqe Bainarimara of Fiji would assume the presidency of the 2017 United Nations Framework Conference on Climate Change (UNFCCC). After preparing the national agriculture sector policy agenda of Fiji for the FAO and the Ministry of Agriculture of Fiji, which was launched by the Prime Minister himself in August 2014, and after two more separate assignments for the Ministry of Agriculture of Fiji and the Secretariat of The Pacific Community until March 2016, the next step that I envisioned would be the building of the mechanisms for more vigorous funding and technological resource mobilization.
However, the effort of the Government of Fiji for venturing on the grand scale undertaking I was hoping in line with the progress of the country’s agriculture sector was uncertain. They still kept going back to programs and projects they are familiar with. In other words, they maintain the status quo by relying on compartmentalized but routinely splintered government activities complemented with those sponsored by international development agencies and foreign partners, which by design and magnitude are following the same approaches that have not lifted the economic development status of the country in the past. The national development programs of the country, not only for agricultural development, are still broken down into silos wherein every institution, domestic and international, are comfortable. There must be new and vigorous development efforts. More importantly, adequate funding and the most appropriate technological and human resources must be made available.
I recognized that unless the country’s organizational and technical capability in project development and securing abundant funding is strengthened and becomes dynamic, it is difficult to ensure the flow of the needed amount of investment and open the opportunities for the infusion of new ideas and technologies for economic development. My impression in Fiji, and based on a similar experience over a period of 20 years in the country of my birth, the Philippines, is perhaps due largely to the lack of national self-confidence for bolder and bigger national commitment and policy experiments. Perhaps the imagination for an ambitious undertaking is hampered by the reality that funding for projects could not be seen closely. To some extent, the Fiji and Philippines cases that I observed are glaring realities that are not recognized. Can we then conclude that the presence of international development agencies bringing along with them projects that are merely inadequate and in their respective silos are still leaving many countries in the world still underdeveloped?
My experience in Fiji and the Philippines further confirmed my own hypothesis that there must be a national collective effort in creating and eventually bringing-in adequate investment to developing countries. I observed that the development plans of the two countries are only presented for government budgeting, without the mechanism for generating sustainable foreign and domestic investment. However, the cases of the Philippines and Fiji are not isolated. Rather, this lack of organizational and technical capabilities for generating investment is common in most developing countries.
Building the National Capability Through Climate Change Investment and Technological Resource Mobilization
While waiting with patience, I was hoping for the right opportunity wherein I would be able to actively participate in formulating national investment agenda with a built-in training program for enhancing organizational and technical capabilities in project development, technological resource mobilization, and fund generation. I recognized that Fiji’s leadership of the 2017 UNFCC was a unique opportunity. I then started to consider the climate change framework as the appropriate global structure that could trigger the interest of Fiji in building its national capability on funding and technological resource mobilization. I thought it would inspire the national government to develop its own climate change investment agenda. In effect, Fiji could show the world that it has its agenda worthy of attention and emulation.
I sent an email to the Fiji Mission in New York City asking for a meeting in line with the preparation of the national climate change investment agenda for the country. My request was granted, and on November 23, 2016, I met the Chargé d’Affaires of Fiji, Ambassador Luke Daunivalu at the Office of the Fiji Mission to the UN in New York City. My suggestion was to prepare for Fiji its national climate investment agenda ready for capital and technological resource mobilization, while at the same time, the organizational capability in project development and funding negotiation is strengthened. I also talked about the establishment of the Fiji Climate Change Investment Fund.
Apparently, my initiative was ahead at that time considering that the preparation of the Nationally Determined Contribution (NDC) of Fiji was still underway. I was thinking that it would be more prudent if Fiji could immediately show a model national climate change investment agenda first, for a more meaningful one-year leadership of the UN climate change conference. Then the NDC would just be based on the investment agenda, which would already consider Fiji’s geography and its overlying ecosystems that are really fragile to climate change. Most importantly, the projects identified would be immediately turned into a bankable undertaking. In effect, these projects would be ready for funding negotiation and technological resource mobilization. These products would trigger the building of a sustainable enterprise under government leadership. However, my idea, surely, would not be accepted in the mainstream climate change consulting business.
Climate Change Adaptation Over Carbon Credit
Fiji’s case has vital symbolic importance to the Paris accord, not only due to the country’s leadership of the UNFCCC in 2017 but more importantly, it is a small country that would be affected by climate change. While the country’s contribution to reducing greenhouse gas emissions is rather small relative to the global target set by the Paris accord, the impact of climate change in the vulnerable island ecosystem of the country in the South Pacific should be the primary concern not only of Fiji but the entire world. The situation in the South Pacific is not created by the people of Fiji, with the existing traditional practice intact, for instance, maintaining their forest covers and water coming from the forest is just drained to the ocean without being commercially used for energy, irrigation, and aquaculture. Instead, Fiji is being asked for a quantified carbon emission contribution. This carbon tariff system, nonetheless, should not be the end, but the means for Fiji to attain real development.
Every country in the world must be concerned more about Fiji’s adaptation to climate change, rather than pressing the country to comply with carbon emission quantity. Nonetheless, in the process of employing adaptation measures such as agroforestry, flood and river control, hydro energy, solar energy, wind energy, and biomass gasification wherein the country has the resources to use, the development focused climate change approach could be aligned with the national development of the country. More importantly, aligning development cooperation towards climate change-related approaches will definitely lead to building organizational capabilities of the entire government machinery.
The Recognition of the Need for Building the Capability for Capital and Technological Resource Mobilization
Finally, it has been recognized that there is an urgent need to translate the projects identified in the Fiji NDC into projects with a financial model ready for investment. The World Resources Institute has been tasked with carrying out the undertaking for Fiji. Based in Washington D.C., the institute has announced the development of financial models to augment the business case of projects identified in the NDC of the country. The undertaking also desires to align the NDC in the context of the country’s national development program.
The NDC of Fiji contains mostly statements of compliance to reducing carbon emission by decreasing petroleum fuel consumption using renewable energy, improving energy efficiency, and adaptation to climate change. While the NDC touched on the funding of the identified interventions, I was thinking that sooner they would realize that generating the funding requirement, aligning the NDC with the national development program, and ensuring private sector participation would be important. After about four years, since the NDC of Fiji was submitted, the concern now is how to generate the funding requirement and mobilize the needed technological resources.
Before negotiating the projects for investment, however, there is an apparent need to formulate an inclusive climate change investment agenda to bankroll a better structured and more organized campaign and negotiation of projects for investment purposes.
Fiji’s case in line with the Paris agreement compliance is not unique. I went over the NDC of different countries and I saw the common feature, particularly among developing countries. Still, funding and technological resource mobilization are not clear.
The Mozambique Case
It did not surprise me also when Enabel, the Belgian development agency and responsible for the Belgian governmental cooperation, is exactly thinking today for Mozambique the importance of capital and technological resource mobilization coupled with capacity building and inter-agency collaboration. I realized that I have already prepared a template of how the climate investment agenda should be developed using Fiji as the case. I could easily adjust this template for Mozambique. I am therefore using this model for project identification, project development, capability building, and capital resource mobilization campaign for Mozambique’s climate change agenda.
The Belgian development agency has recognized that “Mozambique has taken significant steps towards the implementation of the Nationally Determined Contribution (NDC) in fulfillment of the Paris climate agreement.” In particular, Enabel also acknowledges that Mozambique’s NDC is indeed ambitious as it prioritizes adaptation to Climate Change and highlights the commitment plan to massively reduce CO2 emission from 2020 to 2030. The realization of this objective, however, will “depend upon the support of the development partners in providing the financial, technological, and capacity building to the Government and Civil Society institutions.” I presume based on the appraisal of Enabel, the areas of concern that the Government of Mozambique must ultimately address requires technical assistance as clearly stated by the Belgian development agency.
After submitting the NDC of Mozambique in April 2017, on 14 November 2018, “the draft Partnership Plan was validated at a multi-stakeholder technical meeting with over 80 participants drawn from national and provincial government institutions, NGOs, the private sector, and academia. The Partnership Plan addresses the short-term priority needs set by the government for implementation of the NDC Road Map and includes the “development of pipelines of bankable climate change-related projects in all sectors and resource mobilization and project financing and strengthening institutional coordination and private sector engagement.
The main difference between the World Resources Institute plan for Fiji and the assistance that Enabel is extending for Mozambique is the focus of the latter on training for capability building in line with climate change finance. The former has a more specific focus on the financial model, but with a lesser focus on capability building. Nonetheless, the two initiatives must be highly commended because capital resource mobilization should have been done immediately right after the signing of the Paris Accord in 2016.
THE GUIDING CONCEPTUAL FRAMEWORK FOR THE PREPARATION OF THE CLIMATE CHANGE INVESTMENT AGENDA FOR MAZAMBIQUE
Understanding the Geography of Mozambique
Mozambique located in Southern Africa has a total land area of 786.380 square kilometers. The country’s geography is divided into two major topographical regions. To the north of the Zambezi River that runs almost through central Mozambique, a narrow coastline and bordering plateau slope upward into hills and a series of rugged highlands like Angonia Highlands and Lichinga Highlands punctuated by scattered mountains.
South of the Zambezi River, the lowlands are much wider with scattered hills and mountains along its borders with South Africa, Swaziland, and Zambia.
The country is drained by 25 major rivers, and nine of which are shared with neighboring countries. Zambezi River, the fourth-longest river in Africa, is the largest and most important. Other important rivers flowing in Mozambique include Limpopo, Licungo, Lurio, Rovuma, and others, that drain to the Indian Ocean.
Lake Malawi (Nyasa) is the country’s major lake. It is located on Mozambique’s border with Malawi. The Cahora Bassa is Africa’s fourth-largest artificial lake. A small slice of Malawi’s Lake Chiuta sits in Mozambique.
Mozambique is divided into 10 provinces. South of the Zambezi are Maputo, Gaza, Ihhambae, Manica, ad Zofala. To the north of Zambezi are Tete, Zambezia, Nampul, Niassa, and Cabo Delgdo. The country also hosts one city, the Cidade de Maputo. The provinces are subdivided into 129 districts which, in turn, are divided into 405 Administrative Posts. The latter is divided into Localidades.
Translating Innovative Climate-Related Projects Worthy of Investment
Climate-related projects are usually not attractive for commercial capital investment. As a matter of fact, traditional public works infrastructure projects sponsored by the government are more attractive to international development banks. However, technological advancements have already transformed renewable energy, agricultural production and aquaculture, forest resources management, waste recycling, and water resources management projects to be financially feasible enterprises. They are already slowly gaining attention even from mainstream commercial banks. What is lacking though is the needed organizational and technical capabilities of many countries for transforming climate-related projects into business models worthy of investment. Perhaps, the culture of dependency on international development leadership remains a factor in attaining self-reliance in the development of worthy projects for investment in these countries. This phenomenon must be addressed while Mozambique aligns itself to the global climate change agenda.
The climate-related projects to be identified that are included or alluded to in the NDC of Mozambique for the Paris agreement must not be only written down as plain commitment for carbon emission and climate-related program adaptation. The projects must be designed and executed as enterprises worthy of investment. Furthermore, the projects must be put together into an inclusive national agenda with community development and private sector dimensions supported by good governance and sustainable funding mechanisms.
The preparation of the financial model for climate-related projects can proceed at a better speed going in the desired direction if the identified projects are clustered first around a specific area and sector, and most importantly, aligned with the national climate change investment agenda. Furthermore, to ensure sustainability, the identified projects must be smoothly injected into the national development plan and the sector-specific development plans of different line agencies of the government.
Furthermore, the national capability of Mozambique in project development, funding negotiation, and project implementation must be strengthened.
Climate-Related Investment Projects Aligned With National Development Plan of Mozambique is an Ecosystem of Investment Opportunities
The climate change investment agenda must be projected as an ecosystem of climate-related projects. In a natural ecosystem, there is a relationship that triggers the chain reaction leading to the formation of a larger and stable ecosystem. In the case of an interconnected or an ecosystem of climate change projects, for instance, the introduction of a renewable energy project can create an opportunity for the production of crops that can be used as feedstock for a gasification plant that generates electricity.
In the same manner, wastes from coconut, sugarcane, rice, and cotton processing are then used as feedstock for renewable energy plants. Wood chips that are abundant in Mozambique from forest wastes can be used also as feedstock for a gasification plant that generates electricity or even biodiesel.
The excess heat in gasification can be used for cold storage operations without the need for electricity, which is co-generation technology. Cold storage will address the problem of farmers for the storage of fruits, vegetables, and root crops both for export and domestic market. In effect, more farmers are attracted to grow crops, thus generating employment opportunities and land would be more productive. With the application of appropriate technologies that maintain soil health and utilize water efficiently, an agricultural production and processing system is thus established as a climate-resilient practice. The ecosystem of innovations and technological and business adaptation becomes interconnected, but what triggers it is a renewable energy business model.
The same ecosystem model applies to a specific area, for instance, in a river basin, interrelated investment projects for infrastructure, renewable energy, agricultural production, postharvest processing, seed production, processing, and storage for buffer stocking in preparation for disaster rehabilitation can be identified. The ecosystem of projects within a specific area is triggered by a climate-related project, which is renewable energy.
There are more chains of opportunities triggered by climate-related investments. These ecosystems of investments are therefore very vital to the economic development plan of Mozambique.
Finally, the investment agenda must be formulated as an inclusive development undertaking, with built-in self-sustaining investment mechanisms to ensure the sustainability of funding. The climate change agenda must not only be technically compliant but must be also financially sound business models for investment purposes.
Investment Campaign With Built-in Capability Enhancement Approach
The ambitious NDC of Mozambique requires adequate funding complemented with the most appropriate technology. Therefore, there is a need for a vigorous and concerted campaign that is carefully structured. In line with building the organizational and technical capability of Mozambique in investment campaign, there is a built-in training agenda.
The investment campaign must be national in scope that is going to build the capability not only in the government sector but even in the private sector and civil society groups. The appropriate expertise is needed by banking on common sense and more importantly, the wisdom of imagination.
The tasks to build the investment agenda for climate change will carry out different activities that will result in the development of projects ready for an investment negotiation. In the process, the participants from different agencies are exposed to a collaborative undertaking and real cases of project development and funding negotiation. These activities include project identification, project development, financial modeling, funding negotiation, report preparation, and the most important, multisectoral and interagency collaboration. The combined project development, on-the-job training, and funding negotiation exercises will be documented for further improvement for training purposes.
The training component is also like an experimental exercise wherein different treatments are tested with different replications. In the process, the most appropriate business models or a set of business models are tested. These models could set the benchmark for further project improvement. By treating the different ecosystems of projects as an experimental plot and taking sample projects to be put forward for negotiation, the projects may represent entire Mozambique.
Nonetheless, the design of the investment campaign, which is a real case for training purposes, will be agreed upon through a participatory process.
Mapping-out the Climate Change Investment Projects
The identification of shovel ready projects for investment from the NDC of Mozambique, which will be eventually included in the national development plan of government agencies, must be based on clear guidelines. The fundamental consideration in development planning, particularly in the more environmentally sensitive climate-related investment, first and foremost, is the technical appreciation of the geography of the country with the overlying ecosystems. Unfortunately, in the developing countries of the world, geography is only appreciated mainly for political subdivisions, not in the context of an ecosystem.
The predominant ecosystems in Mozambique’s two major topographical regions, the region south of the Zambesi River consisting of five provinces, and to the north of the longest river in Mozambique are as follows:
- The river systems and their basins
- The highland and forest ecosystem
- The coastal marine and its adjacent coastal plain ecosystem
- The urban and peri-urban settlements
The shovel-ready investment can also be identified on the basis of the economic sectors that provide livelihood and support services for the economy of Mozambique to work and propel. These sectors are as follows.
- Plantation crops (cotton, tea, etc.)
- Grains (Rice, corn, and sorghum)
- Fishing Sector
- Forestry Sector
- Livestock, poultry, and dairy
- Crop Sector
- Rural Industry
- Domestic and international trade
- Public infrastructure
- Banking and financial services
After laying out the geography and vital sectors of the Mozambique economy, the different investment priorities by the government and the private sector are then reviewed according to the Nationally Determined Contribution (NDC) of Mozambique. By assessing the country’s geography, economic sector, government priorities, and recommendations from the private sector and the international development organizations, the identified projects are clustered as an inclusive national climate change investment agenda aligned with Mozambique’s commitment to the Paris agreement through the NDC of Mozambique.
The table below shows the guiding tool in the identification of climate-related investment priorities by topographical region and by province. The matrix shows the integration of investment priorities based on administrative jurisdictions. The blank cells are for spaces wherein the identified investment projects from agency development plans are plugged in. The vertical integration aggregates the investment agenda by province, which takes into consideration the predominant ecosystems. The major ecosystems are the river basins, the coastal marine and its adjacent coastal plain, the highlands, and the urban and peri-urban settlements. The smaller lake and small islands’ ecosystems are also part of the overlying ecosystems in the geography of Mozambique.
By horizontal integration, the matrix defines the national investment agenda according to the ecosystem. This integration is more important for technological resource mobilization as technologies are fitted to the need of a specific ecosystem. Furthermore, this integration is also an important guide for sectoral government line agency development directions.
The vertical integration is by province, which may contain different ecosystems that are connected. For instance, by following the flow of the river, the tributaries and their watershed down to the coastal marine communities provide the geographical base in the identification of climate-related projects that aggregate to become the investment agenda of the province as a political unit.
The vertical and horizontal integration finally takes into account the projects by sector of the economy as shown in the table below. The main purpose of his integration is to define the strategic economic direction of Mozambique in the context of the major industries and its support government systems. Furthermore, the integration by sector is the link between the physical and biological ecosystem on the one hand, and the administrative and political ecosystem, on the other hand.
Developing Financial Models of The Identified Projects for Investment
Financial Model Definition
Financial modeling is the task of building an abstract representation of a real-world financial situation. Financial modeling’s applications vary according to the intended readers of the project document. For climate change projects seeking investment, the profitability of the enterprise, and the benefit derived in terms of savings in petroleum fuel or electricity consumption, are the common primary parameters.
For government policy purposes, the financial model usually shows the annual rate of return (Internal Rate of Return), which calculates the investment annual rate of return, valuation of the project using discounted cash flow (Net Present Worth), the ability of the project to repay the investment (Payback Period), and the income derived for distribution to investors and partners. On the other hand, for a development project with social, economic, and environmental importance, the financial model also takes into account other parameters such as employment generation, tax revenue generation, savings on petroleum fuel to be accrued, and the benefit to the environment computed in financial value.
Climate-related investment projects in Mozambique must be aligned with the country’s NDC. Electricity generation through renewable energy, electricity efficiency through appropriate housing construction, reduction in fossil fuel utilization, and adaptation to climate change using appropriate technologies in agriculture and other economic sectors are the chosen paths of the country to reduce carbon emission. Apparently, projects that address Mozambique’s NDC are not yet appraised based on their financial soundness. The introduction of innovative climate-related projects that trigger the creation of other related projects is not yet fully appreciated. Furthermore, the framework of every project identified for NDC compliance is the obligation of the state without due regard to preparing the projects as financially sound for investment purposes must be overridden by the urgent need to mobilizing investment.
Therefore, the financial model must be comprehensive particularly in terms of its scope and impact within an ecosystem of investment projects. The project’s contribution to the economy in terms of government revenue, employment generation, resource productivity, environmental impact, and poverty in general, are important parameters and must be clearly expressed in financial value. For instance, the establishment of waste to energy infrastructure for the sugar sector will measure the incremental benefit of using bagasse compared to its present use.
The financial model is project-specific because there are no standardized parameters in measuring the economic, social, and environmental costs and benefits. In general, however, the financial model is not only about the profitability of the investment, but it has also to demonstrate its direct and indirect impacts. In particular, the financial model can relate to other investment opportunities triggered by the investment.
In my first experience in financial modeling for investment projects in 1985 in the Philippines, I was responsible for the preparation of the financial model for a provincial integrated area development project that was submitted to foreign development assistance agencies. We were advised by our Principal Adviser from the UN-ESCAP that we should not look only at the viability of the specific projects. We then presented the financial model for the entire development project because it is an integrated area development model as every project component such as lowland agriculture, upland agriculture, coastal fisheries, and infrastructure are important. We were taught that the investment projects should not be selected based on the basis of the future return of the project alone using the IRR. Therefore, while financial models for every project are developed, it is also sound if there is a unified financial model for an integrated climate-related project in a specific zone or sector, for instance for the Sigatoka Valley and for the coconut sector.
Sensitivity analysis, taking into account a decrease in revenue and increase in cost by a certain percentage point will be placed in the financial model.
For development projects with combined economic, social, and environmental benefits, the with and without the project cost and benefit analysis will be employed. This tool in financial analysis is important for investment and policy formulation purposes.
In the case of the climate-related investment projects in Mozambique, which according to the country’s NDC are primarily aligned with electricity generation, electricity efficiency, reduction in fossil fuel utilization, and adaptation to climate change, the importance of the financial soundness of the introduction of innovative projects that trigger the identification of other related projects must be given emphasis. The notion that projects that are identified for NDC compliance are the obligation of the state without due regard to financial soundness for investment purposes must be overridden by the importance of mobilizing investment. Therefore, the financial models must take also into account the relationship among projects.
Planning Cost Standard
The financial model for the identified projects must be based on precise costing. In fact, this cost component is the most critical part of preparing the financial model. By starting the common planning cost standards by sector that are highly relevant to the projects, this basis of the calculation and projections for the financial models will be very important and to be incorporated in the final report. This planning cost standard will help in the appraisal of the project for funding purposes in the future, particularly for financial institutions that will be interested in the projects. For example, wage rate, cost of electricity, housing construction cost, transport fare in the land, water, and air, production cost per hectare of feedstock crop, cost of waste disposal, electricity generation rate, and other cost standards will be determined and organized as supporting documents.
The Overview of the Plasma Gasification Plant as the Sample Financial Model
I wish to mention the schedule for a waste to energy project that a Korean client asked me to prepare. It is a plasma gasification plant that will convert municipal wastes into a synthesis gas (syngas) that will be used as fuel for a boiler to generate steam to power a turbine for electricity generation. The capacity is 30 MW and the daily volume of municipal wastes to be processed is 600 metric tons.
In the investment schedule, the cost is 200 million USD and the annual depreciation is computed for the annual income projection.
The maintenance cost is 2 percent of the investment annually. The personal services cost includes the salaries of plant workers and plant professionals. The personal services cost and the annual maintenance cost are added in the computation of the operating cost.
In determining the electricity output, the MW capacity, number of hours of operation at 97 percent operating time, and the output at 30 MW provide the basis in the total annual electricity generation. This electricity output is priced at the prevailing electricity price if the plant is connected to the grid.
The income streams include electricity, the biochar as the by-product of the plasma gasification process, and the tipping fee for processing the municipal waste paid by the city.
This model can be used in renewable projects and other climate-related projects to be identified. I have at least four climate-related financial models to show but I decided to show this one that I worked on that required me also to visit the Westinghouse plant in Pennsylvania. I was told that our financial model is very close to their own model.
I have been envisioning that the business models that I have developed derived from years of experience and professional interaction with clients and peers, which are climate-related such as biomass gasification, the introduction of line planting technology in agroforestry integrated with biomass gasification, ethanol plant using root crops, and electric bus re-fleeting with support assembly plant, could be then introduced and further studied in Mozambique. I was envisioning that one of the major outcomes of the development of the investment agenda would be a compendium of climate-related business models, which could be published to be credited as work of the Government of Mozambique.
After I discontinued my initiative to negotiate with the Fiji Government to prepare its climate change investment agenda during Prime Minister Bainiramara’s term as President of the 2017 United Nations Framework Conference on Climate Change (UNFCCC), my attention was directed to compiling all my works. I then realized that 15 years already passed when I compiled my works for the compendium of business models I wrote entitled Modernizing Philippine Agriculture, Model Farms for Agricultural Modernization, and Model Agro-Industrial Infrastructure Systems. I eventually spent two years putting together my previous works into a compendium of business models entitled Business Models for Collective Governance, which I completed in June 2018.
Nevertheless, I am still hoping that my recommendation of preparing projects that would be immediately negotiated for investment would be recognized at the right time because, without funding, the Paris agreement would not easily take off. Apparently, this consulting contract announced by Enabel for Mozambique is highly in line with what I wish to accomplish for international development, for climate-related projects in particular. For this assignment, I am proposing the publication of the work both for general reference, training, and investment purposes. This could be in another assignment or part of this contract. Replication of the work can be proposed to other countries who are interested in crafting their own climate change investment agenda.