Reducing Angola’s reliance on food imports

How would you describe Biocom’s production process?
Biocom operates in the entire sugarcane production chain. As part of the agroindustry, we begin our process with the cultivation and treatment of sugarcane. After being harvested, this is transported to industrial facilities and processed before being turned into our three finished products, namely, sugar, ethanol and electricity. Electricity is generated from the burning of sugarcane bagasse (stalks) biomass in our high-pressure boilers.
We chose the agro-industrial hub of Capanda to build our processing plant, which has a capacity to produce 250,000 tonnes of sugar and 36,000 cubic metres of ethanol annually. Our onsite power plant can generate around 136,000 MWh per year.
In terms of revenue, our main product is sugar, and Biocom is essentially a sugar company. But both ethanol and electricity are fundamental for the sustainability of our business.

How much of Biocom’s electricity generation is supplied to the national grid?
Part of the energy we generate is consumed by Biocom during the processing and production stages, but we also generate a surplus, which we make available to the Rede Nacional de Transmissão de Eletricidade (RNT), the country’s electricity offtaker.
During harvest, we consume around 30-40% of the energy we produce. The surplus, which is 60-70%, is made available to the national network. This generation of surplus energy is by design and was planned at the company’s conception since the project has always seen Biocom as an IPP company.

What are the main challenges in making the local energy sector attractive to IPPs?
I think this is an issue that Angola still needs to address. The General Electricity Law must be updated, as well as the rationalisation of electricity rates for industrial and domestic consumers. For now, private investors still find it difficult to obtain rates that allow them to make back their investment and capex. This must change. There is a plan, but the law has not yet been defined. Investors need to know that they will be remunerated, but there is still a long way to go in solving this problem.
The country has been investing in independent renewable energy sources, but as far as I know, we are the only privately owned IPP for now. As such, we are going through challenges associated with being pioneers. However, things are looking up. I think that Angola has been developing the necessary policies. This is a very young country that has been learning and improving with each passing year. Given that Angola is one of the signatory countries of the agreements established at the COP26 summit, I believe that the future lies in the investment in and development of clean and renewable energy generation projects, made viable through incentives in tax deduction or remuneration tariffs.

As the country’s first IPP, how is Biocom navigating the energy sector’s constantly evolving regulatory framework?
We used to have a contract with RNT, but that ended in 2020. Since then, we have been working on this issue, together with all the players involved, and we are expecting to have a new CAE (energy purchase agreement).
The generation of clean and renewable energy has been part of Biocom since the beginning. The project was conceived with the aim of generating energy through biomass and exporting the surplus. This was, and still is, one of the premises for the sustainability of our company and this is why we made all the necessary investments.
Angola is now in the process of creating rules for renewable energies and IPPs, which shows that the country is in tune with global demands for cleaner energy matrices, which indicates that Biocom is on the right track.

Can Biocom’s ethanol be used in the next refineries in Angola?
Yes, it is possible. The Biocom project was conceived to produce biofuels, namely anhydrous ethanol, which is incorporated into fossil fuels such as diesel and gasoline, and hydrous ethanol that can be used directly in certain vehicles. However, in Angola, there was no parallel development of refineries or regulations aimed at adding ethanol to gasoline.
As a result, we had to adapt our ethanol distillery to produce extra neutral ethanol. Consequently, our focus has become the beverage and cosmetics industry. Today, 95% of this neutral ethanol goes to the beverage industry in Angola, and 5% goes to hygiene and cosmetic products. All ethanol is consumed domestically.
Transforming our distillery to its original form so that we can manufacture anhydrous ethanol is an extremely simple operation. As in any business, scenarios and commercial opportunities must be evaluated. But at the moment we do not see this option as viable because we have created a close relationship with our customers in the beverage industry. Currently, our product meets about 50% of the country’s demand.

What are the main factors limiting Biocom’s production capacity?
Biocom is a greenfield project. We started planting sugarcane from scratch. Our fields were areas of virgin forest, so we had to adapt the land to make it arable. Today we are approaching our implantation objective.
The limiting factor in our energy generation and production capacities is the availability of our raw material: sugarcane. We have around 30,000 hectares (300 square kilometres) planted but, in the maturity phase, the project will have around 40,000 hectares (400 square kilometres). Biocom is still trying to grow to operational maturity.
The challenge is to have constant investment from the beginning of the operation until we can combine the entire planted area with the installed capacity of the industry.

What kinds of investments does the expansion of the plantation require?
Time is especially important for industries where the main asset is organic, as is the case for Biocom and sugarcane. Companies need the financial capacity to make investments at the right time. If they don’t, they miss the annual harvest and see bad results in a year or two.
In addition to the cultivated area, there is also the issue of soil quality and productivity, which is being improved with the addition of fertilisers, gypsum and limestone.
We have also planned to implement an irrigation system with a central pivot and sprinklers, which should cover an area of about 5,000 hectares [50 square kilometres].
In many other countries, multiple sugarcane suppliers help the industry reach its installed capacity more quickly. We have been working in this direction to motivate and encourage other producers, farmers and cooperatives to be our suppliers. This would certainly help us boost our production levels.

What are the company’s growth objectives in the near future?
Biocom is a young and constantly growing company. We are still in the first phase of our business plan and of our macro planning. In the last four years, our production has grown by around 50% and we expect to grow at the same speed for the next few years. For this to materialise, we have to expand our agricultural area, in addition to verticalising productivity through the implementation of irrigation systems.
The challenge is immense, but we have a prepared and motivated team, as well as the support of our shareholders for the necessary investments. Biocom currently has 80,000 hectares [800 square kilometres] of land concession, which encompasses the first two phases of the project. In addition to the 30,000 hectares [300 square kilometres] of sugarcane already planted, we still need to plant another 10,000 hectares [100 square kilometres], which will bring us up to 100% of our already-installed industrial capacity.

What are the main challenges facing local biomass and sugar production in 2022?
One of the challenges that the Angolan market still faces is competition from imports. In 2022, we were dealing with the appreciation of the national currency against the US dollar, making imported sugar more competitive than locally produced sugar. This affects our business, which is still in the consolidation phase. The market must be mature, organised and harmonious. Imports must balance national production so that local companies survive and continue producing and growing each year. Only in this way will it be possible to diversify our economy.

What do you see as Angola’s fundamental challenge as a growing economy?
Like many countries in Africa, Angola has vast potential in many sectors, especially in agriculture, infrastructure development and energy. However, the main issue is that Angola remains heavily dependent on imports for basic things like food.
Biocom’s project addresses the need for the country to replace its imports and locally produce the most basic foods, such as sugar, which we produce, and which already meets about 40% of the country’s needs.
In this sense, it is essential to consolidate policies to protect and encourage national production, which is common practice in other countries, and to continue investing in the construction of the necessary infrastructure for the industrialisation and diversification of the country’s economy. Investments in the training of increasingly qualified professionals with greater technical knowledge are also essential for Angola to become more competitive.

How important is communicating social responsibility in the development of agro-industrial businesses in Angola?
Our company’s compliance management includes an ethics hotline channel and works independently to implement and control the best practices in this area in our business.
Our social commitment is also very strong, particularly to our region of Cacuso, in the province of Malanje. We have developed numerous projects that range from promoting sports to young people, literacy schools for adults, which have already trained more than 1,500 people, and the construction and maintenance of infrastructure for local populations, in addition to large investments in the continuous upskilling of our employees. Currently, of our approximately 3,400 employees, less than 3% are expatriates, and that number is likely to reduce in the coming years.