Sustainable rural wood chip production in Sri Lanka

Location:         Kurunegala, Sri LankaScreen Shot 2013-11-12 at 06.52.52

Client:             Biomass Group

Project Description:

Biomass Group is developing gliricidia as an energy resource in rural Si Lanka.  Gliricidia is a fast-growing, short-rotation nitrogen-fixing tree that is found growing wild throughout Sri Lanka, and which is grown by plantations as a shade tree and soil improver and by smallholders for “live fencing”, support for other crops, animal fodder and fertiliser.  The majority of Sri Lanka is farmed by smallholders, and Biomass Group is organising the smallholders to grow a combination of gliricidia, vanilla and pepper (which use the gliricidia trunk as support) with the objective of materially increasing their incomes, raising the standard of farming practices and in the process making available a virtually limitless source of commercial biomass for energy generation.

gliricidiaThe majority of processing steam for Sri Lanka’s industry (mainly agricultural produce) is currently produced using oil-fired boilers.  Using biomass would be cheaper (around half the cost) and environmentally preferable, but industry is unwilling to switch until there is a reliable source of biomass available.  Most inductrial customers have limited space for fuel storage and once boilers are converted to burn wood, then if woodchips are not supplied every day then their production lines need to shut down.

Weaning Sri Lanka off an almost exclusive diet of oil therefore requires reliable sourcing, pricing and logistics for biomass.  The Biomass Group has set out to establish this on a vast scale.


Bainton Capital’s Role:

Bainton Capital carried out a full design and costing for the supply logistics, from gathering the raw biomass to delivering a fully processed fuel to the customer, working with client on contracting mechanisms to ensure price stability and with third-party advisers on the information technology aspects of tracking and payments.

Screen Shot 2013-11-12 at 06.53.55The design needed to take into account local factors, such as road corner radii, culvert weight limits, availability and supervision of labour, working practices and regulations and cultural issues.  An efficient container-based system was devised to enable off-line loading and unloading, managed through a system of local receiving agents providing the interface with individual farmers.  An important part of the design was to make it cashless at the point of use, reducing transaction costs and enabling financial control.  Education for local farmers to enable them to get the best of the opportunity was to be delivered by local institutions and networks that saw the benefits to the rural poor.  Under the scheme, a smallholder farmer has the opportunity to increase his annual income by 50% of more without reducing (indeed, often enhancing) the productive capacity of his land.

The design also recommended processing technology and depot design, and finally efficient transport to the end user.

Bainton Capital also costed all the options and produced a detailed financial model to enable the assessment of different logistics designs and optimisation to the final solution.  The model also enabled forms and pricing options for the end product to be assessed.  Finally, Bainton Capital produced formal valuations for capital raising.

At the time of writing the plan has been put into effect and sustainable community-produced biomass is being delivered to industrial customers in Colombo for the production of process steam.