Pre-Feasibility Study for Bankable Biodiesel Project in ENB, Papua New Guinea

Pre-Feasibility Study for Bankable Biodiesel Project in ENB, Papua New Guinea

BACKGROUND

The Global Green Growth Institute (GGGI) is a treaty-based international organization dedicated to supporting and promoting strong, inclusive, and sustainable economic growth in developing countries and emerging economies. In Papua New Guinea (PNG), GGGI works in partnership with the Government of Papua New Guinea to integrate Climate Resilient Green Growth (CRGG) into national and sub-national planning, mobilize climate finance, and develop investment-ready projects that support sustainable economic development. To learn more, please visit the GGGI website.

GGGI is currently implementing the Climate Finance Initiative for Resilience and a Sustainable Transition (Climate FIRST) project, funded by the Australian Department of Foreign Affairs and Trade (DFAT) under the PNG–Australia Climate Change Action Plan (PACCAP). Implemented in close partnership with the Climate Change and Development Authority (CCDA), Climate FIRST supports Papua New Guinea to strengthen climate finance systems, expand access to climate finance through public and private investment, and develop a pipeline of bankable climate mitigation and adaptation investments.

Under the Climate FIRST, GGGI is supporting the identification and preparation of investment opportunities that promote sustainable energy development and private sector investment. Biodiesel production has been identified as a potential opportunity to utilize locally available agricultural feedstocks to support renewable energy generation and productive economic activities in Papua New Guinea.

East New Britain Province has been identified for this assessment due to its established coconut and oil palm industries, existing agricultural value chains, and continued reliance on diesel for electricity generation and productive uses. While these characteristics present significant potential, the technical, commercial, financial, environmental, social, and institutional viability of biodiesel production has not yet been comprehensively assessed.

GGGI therefore intends to undertake a pre-feasibility study to assess the viability of biodiesel production and electricity generation in East New Britain Province, identify appropriate investment and implementation models for private sector participation, and provide an evidence base for subsequent project preparation, stakeholder engagement, and investment decision-making.

Accordingly, GGGI seeks to engage a highly qualified Individual Consultant to conduct a comprehensive pre-feasibility assessment for biodiesel production and utilization in East New Britain Province.

OBJECTIVES OF THE ASSIGNMENT

The overarching objective of this assignment is to develop a practical, investment-oriented and bankable framework to facilitate private sector participation in biodiesel production and electricity generation in East New Britain Province, thus providing GGGI, the ENB Provincial Government and prospective investors with a credible evidence base for investment decisions and project development.

SCOPE OF WORK

The Consultant shall undertake the following tasks during the assignment period. The work is expected to reflect the depth and analysis suitable for an investment grade and climate finance ready pre-feasibility study.

1. Feedstock and Market Assessment

1.1. Map and quantify current and projected CPO/feedstock production volumes in ENB & New Ireland, including seasonal availability, supply chain infrastructure and commercial pricing. Characterize the physical and chemical properties of available feedstock to directly inform technology selection, pre-treatment requirements and expected yields.

1.2. Evaluate the contractibility of CPO feedstock supply for a private biodiesel producer including the willingness and capacity of existing oil mills and smallholder cooperatives to enter long-term supply arrangements.

1.3. Extend feedstock supply analysis to New Ireland Province. Map production volumes, feedstock quality and logistics infrastructure and assess the economics of cross-province aggregation including inter-island transport and storage costs to determine its potential to underpin a larger-scale ENB-centered production model.

2. Technical Assessment of Biodiesel Production

2.1 Review and recommend appropriate biodiesel conversion technologies suited to CPO feedstocks and local conditions.

2.2 Assess infrastructure requirements for feedstock collection, processing, storage, blending, quality control and distribution.

2.3 Identify suitable sites for production facilities considering feedstock proximity, logistics, utilities and environmental considerations.

3. Electricity Generation and Demand Assessment

3.1 Conduct a preliminary technical and economic assessment of biodiesel as fuel for electricity generation, indicative system configurations, generation cost per kWh benchmarked against prevailing diesel tariffs and commercial viability of supplying identified demand centers.

3.2 Assess the productive use of energy (PUE) co-benefits including agro-processing, cold chain, irrigation and small enterprise activity that would be enabled by reliable electricity supply and identify the most commercial attractive and scalable market entry points for a private biodiesel producer in ENB.

3.3 Assess and develop scenarios for grid extension from existing or new biodiesel generation infrastructure to identified priority beneficiary areas across ENB Province.

3.4 Conduct high level assessment of market potential for locally produced biodiesel across ENB’s demand sectors like commercial agriculture, transport and marine operations.

3.5 Conduct a dedicated transport sector biofuel assessment covering road, marine and aviation ground support fuel demand in ENB. Evaluate fleet compatibility, required biodiesel blend specifications and quantify substitution potential under low, base and high uptake scenarios. Determine the optimal end-use allocation of biodiesel production between transport and electricity generation markets.

4. Private Sector Participation Models: Assess viable private sector participation and investment structures for the biodiesel value chain including potential IPP and PPP arrangements, The assessment should consider but not limited to the following models:

4.1 IPP models for biodiesel or hybrid biodiesel-solar-battery energy storage power generation systems.

4.2 PPP or concession models for biodiesel production, storage blending, distribution and supply infrastructure.

4.3 Evaluate a regional supply model with biodiesel production centralized in ENB and feedstock sourced across ENB and New Ireland. Assess the commercial and logistical viability including aggregation costs, inter-island shipping and distribution benchmarked against a standalone ENB scenario. Identify minimum feedstock volumes and key contractual and institutional enablers required to make the model commercially viable.

5. Offtake, PPA and Revenue Model Assessment: The consultant shall assess potential offtake and revenue models required to support private investment, including:

5.1 Long term power purchase agreement (PPA) options for electricity generated from biodiesel or biodiesel hybrid systems.

5.2 Long term biodiesel supply agreements with PNG Power Limited, provincial utilities, isolated grid operators, plantations, industrial users, transport fleets and public facilities.

5.3 Potential tariff structures, payment mechanisms and indexation options to ensure revenue predictability for investors.

6. Economic and Financial Analysis

6.1 Estimate indicative capital expenditure (CAPEX) and operating expenditure (OPEX) for integrated biodiesel production and electricity generation benchmarked against comparable projects in PNG and relevant developing country contexts.

6.2 Estimate the full system production cost per liter of biodiesel and per kWh of electricity generated and conduct a cost competitiveness analysis against prevailing diesel procurement cost and electricity tariffs in ENB.

6.3 Conduct preliminary financial modelling, including project level financial returns, investor return requirements (IRR, payback period, DSCR and RAROC) and sensitivity analysis on feedstock prices, diesel price fluctuations, exchange rates and scale assumptions.

6.4 Assess broader economic co-benefits, including import substitution, employment creation, rural income generation and evaluate conditions required for commercial bankability.

6.5 Develop industrial scale plant sizing scenarios (pilot, commercial and industrial scale), modelling capital requirements, unit production economics and inter-island feedstock and distribution logistics across ENB and New Ireland. Identify the feedstock volume, plant scale and offtake thresholds required for ENB to viably serve as a regional and potentially national biodiesel production hub.

7. Environmental, Social Assessment and Regulatory Enabling Environment: The consultant shall conduct a screening level assessment sufficient to identify key issues, risks and enabling conditions prior to a full environment and social impact assessment.

7.1 GHG and Climate benefits screening: Estimate indicative lifecycle greenhouse gas emissions (GHG) emission reductions associated with biodiesel substitution of fossil diesel using established secondary data and lifecycle assessment methodology.

7.2 Environment and Social Screening: Conduct a screening level assessment of the key environmental and social risk, impacts and opportunities associated with biodiesel feedstock preparation, processing and electricity generation in ENB.

7.3 Regulatory and Policy Framework Review: Review the national and ENB provincial policies, legislation, standards and institutional arrangements relevant to biofuel development and identify institutional barriers, policy gaps and enabling conditions required to support biodiesel market development. Provide recommendations for strengthening the enabling environment for biodiesel investment.

8. Preliminary Risk Assessment and Investment viability: The consultant shall conduct systematic, structured risk assessment of the proposed biodiesel project in ENB. At pre-feasibility stage, this assessment will focus on identifying and characterizing the principal risk categories, screening their potential significance for project viability and establishing the mitigation approaches and enabling conditions that would need to be addressed in a subsequent full feasibility and project development phase.

8.1 Develop a structured risk matrix identifying key project risks across:

8.1.1 Technical and technology risk.

8.1.2 Feedstock supply and price risks including supply chain reliability, seasonal availability, price volatility and commercial terms under which long-term feedstock supply could be secured. Offtake and Market risks: assess the depth and reliability of demand for biodiesel and biodiesel generated electricity in ENB and the commercial sustainability of potential offtake arrangements.

8.1.3 Regulatory and permitting risk: assess the clarity predictability of the regulatory framework, identify key permitting requirements and timelines and flag areas where regulatory ambiguity or reform may be needed to reduce investor uncertainty.

8.2 Sovereign and political risks: assessing country risk, foreign exchange convertibility and transferability risks, government commitment to policy stability and the availability of political risk insurance or guarantee instruments from MIGA, ADB or bilateral ECAs.

8.3 The risk allocation matrix shall assign each risk category to the best placed party to manage it (private developer, government, off-taker, DFI or insurer etc.) and identify the contractual or institutional mechanism through which the risk should be allocated, providing a structured basis for subsequent transaction structuring and investor negotiation.

9. Investment case summary

9.1 The consultant shall prepare a well-structured, evidence-based document presenting the key findings and conclusions of the pre-feasibility assessment for review by GGGI and other stakeholders. The document should summarize the proposed investment opportunity, including indicative investment size, expected revenue streams, key risks, government support, next-stage studies required and proposed pathway for private-sector engagement.

9.2 The summary shall include:

9.2.1 Market sounding: a targeted engagement plan for conducting market sounding with private developers, IPPs, project finance lenders, DFIs and impact investors.

9.2.2 Data room preparation: identify the data, studies, permits and legal documents needed to support investor and lender due diligence, including any critical gaps to be addressed in the next stage of project preparation.

9.2.3 Next stage studies: identification of the full feasibility, technical, legal and environmental & social studies needed prior to financial close.

9.2.4 Anchor investor and DFI identification: a shortlist of the most suitable anchor investors, co-sponsors distinguishing between those who could participate at the pre-financial stage and those suited to take equity of debt positions at financial close.

10 Stakeholder Consultations and Validation

10.1 Conduct stakeholder consultations in Port Moresby and East New Britain Province.

10.2 Conduct targeted market sounding with relevant private sector actors, including biodiesel technology providers, renewable energy developers, palm oil companies, fuel distributors, potential IPPs, commercial banks, development finance institutions and potential off takers.

10.3 Facilitate a stakeholder validation workshop to present preliminary findings and obtain feedback.

10.4 Prepare a stakeholder consultation and validation report that summarizes key informant findings, workshop proceedings and how stakeholder input was incorporated into the final assessment.

DELIVERABLES AND PAYMENT SCHEDULE

OUTPUT / DELIVERABLE

PERCENTAGE

OF MAXIMUM AMOUNT

DUE DATE

Inception Report, methodology, data collection framework, workplan and investor-framework outline

15%

2 weeks from contract issuance

Feedstock, Technical and Electricity/Demand Assessment Note (Objectives 1–3): consolidated findings on feedstock, technology and market/demand assessment

20%

4 weeks from contract issuance

Draft Investment Framework and Preliminary Commercial Analysis (Objectives 4–8): participation models, offtake, financial analysis, E&S screening and risk assessment

30%

6 weeks from contract issuance

Draft Investment Case Summary and Stakeholder Validation Presentation (Objectives 9–10): draft synthesis document presented at validation workshop

15%

8 weeks from contract issuance

Final Bankable Investment Framework, Investment Case Summary and final presentation (Objectives 9–10, finalized)

20%

12 weeks from contract issuance

The Consultant will report directly to the GGGI PNG Country Representatives and consult closely with the designated GGGI PNG Senior Energy Officer throughout the assignment. The Consultant is expected to maintain proactive communication with the GGGI team, provide brief weekly progress updates by email/virtual meetings and remain responsive to comments and requests for clarification.

EXPERTISE REQUIRED

Technical

• Advanced university degree (Master's minimum) in renewable energy, chemical engineering, agricultural engineering, energy economics, environmental sciences or a closely related field or an equivalent combination of relevant academic qualifications and professional experience.
• A minimum of eight to ten (8-10) years of professional experience in bioenergy, biodiesel systems, renewable fuels or renewable energy project development.
• Demonstrated experience in techno-economic analysis and financial modelling for energy projects, including CAPEX and OPEX estimation, cost benefit analysis, LCOE modelling and lifecycle GHG assessment.
• Demonstrated experience in structuring private-sector-led renewable energy, bioenergy, fuel substitution, IPP, PPP or concession-based investment models.
• Experienced in assessing bankability requirements for energy projects, including offtake arrangements, PPA structures, payment security, risk allocation and investor return considerations.
• Familiarity with project finance, blended finance, concessional finance and development finance instruments applicable to early-stage infrastructure or renewable energy investments.
• Experience preparing investor-facing materials, investment memoranda, market sounding reports or transaction concept notes.
• Demonstrated experience working in Pacific Island Countries or comparable small island developing state (SIDS) contexts is strongly preferred.

Functional

• Proactive attitude with the ability to find implementable solutions promptly.
• Punctual, professional and ability to work under pressure and meet deadlines.
• Strong interpersonal skills and ability to work effectively with multicultural and interdisciplinary staff and counterparts.
• Excellent English language written and oral communication skills, including the ability to present complex technical findings clearly to non-specialist audiences.

ADMINSTRATIVE INFORMATION

Interested consultants shall submit following documentation:

• A cover letter (maximum 2 pages) proving the candidate's relevant experience and suitability for the assignment.
• A technical proposal (maximum 10 pages) outlining the proposed methodology, approach and work plan.
• A financial proposal specifying the daily or lump sum consultancy fee in USD.
• At least two (2) samples of relevant earlier reports or written work products.

GENERAL INFORMATION

Project: Pre-Feasibility Study for a Bankable Private Sector Investment Framework in Biodiesel Production and Electricity Generation in East New Britain Province
Duty Station: Port Moresby, Papua New Guinea
Contract Duration: 12 weeks
Consultant Level: 5
Total Fees: USD 24,000

Child protection – GGGI is committed to child protection, irrespective of whether any specific area of work involves direct contact with children. GGGI’s Child Protection Policy is written in accordance with the Convention on the Rights of the Child.