INVESTMENT MEMORANDUM

Northern Biogas Company Limited

Nakhon Ratchasima, Thailand

March 2019

HIGHLY CONFIDENTIAL

Highly confidential
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SUMMARY ....................................................................................................................2
1.0 BIOGAS PROJECT ................................................................................................3
1.1 BIOGAS PROJECT OVERVIEW.................................................................................. 3
1.1.1 Business Model............................................................................................... 4
2.0 OFFTAKERS ............................................................................................................ 7
2.1 Petchtara Co., LTD - feedstock supplier and energy offtaker............................. 7
2.2 RE Biofuels Company Limited -the biogas upgrading plant ............................... 9
2.3 Third party buyer - kWh by wheeling ............................................................... 10
2.3 Third Party - tVER buyer ................................................................................... 10
3.0 TECHNOLOGY ........................................................................................................... 12
4.0 INVESTMENT COST .................................................................................................... 14
5.0 OPERATIONS AND MAINTENANCE ................................................................................ 15
6.0 SHAREHOLDERS ........................................................................................................ 16
7.0 TECHNICAL REVIEW ................................................................................................... 17
7.1.1 Starch factory operations /feedstock supply ...................................................... 17
7.1.2 Projected Energy Production ............................................................................... 18
7.1.3 Biogas project actual performance versus projections ....................................... 19
8.0 FINANCIAL SUMMARY...................................................................................... 17
9.0 IMPACT OF PROJECT ........................................................................................ 18
5.0 RISK ANALYSIS ................................................................................................. 23
7.1 PRE-OPERATING RISKS ......................................................................................... 23
7.1.1 Completion risk: Technology and Timing ..................................................... 23
7.2 OPERATING RISKS................................................................................................. 24
7.2.1 Feedstock Risk – Price .................................................................................. 24
7.2.2 Feedstock Risk – Quantity (Host Company business risk) ............................ 24
7.2.3 Throughput risk - Biogas .............................................................................. 24
7.2.5 Conflict of interest risk ................................................................................. 25
7.2.6 Oil price risk .................................................................................................. 25
7.2.7 Operation and maintenance cost overrun risk............................................. 25

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SUMMARY

The Project is Thailand’s largest biogas power plant (“Biogas Project” or “Project”). It
consists of a Hybrid Covered Lagoon Reactor with 120 000 m3/day biogas production, and
6 MW power generation. The Project converts wastewater and residual biomass
(“Feedstocks”) to biogas, and electricity. Feedstock is secured with a minimum 12-year
feedstock supply agreement. Biogas and Electricity offtake is secured with long term
corporate PPAs.

The Project was completed in two Phases.

1. Phase 1 - fuel substitution – reached commercial operation in August 2018. The

Project reached EBITDA margin of >50% in 2018.

2. Phase 2 – 6 MW electricity generation -reached commercial operations in March

2019. Phase 2 significantly increases profitability.

Project revenues at full scale sales in 2020 come from the following sales:

Revenue USD/year
Petchtara 3,055,334 67%
RE Biofuels 326,764 7%
kWh sale to third party* 1,164,467 26%
TVERS 0 0%
Total 4,546,565 100%

Total revenues are projected at THB 4.1 million, with EBITDA margin of 60-70%. The Internal
Rate of Return (“IRR”) of the Project is 23 % in Base Case.

The Project drastically reduces water pollution and air emissions and contributes towards
15 of the 17 Un SGDs.

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1.0 BIOGAS PROJECT

1.1 BIOGAS PROJECT OVERVIEW
The Biogas Project is a large-scale 195 000 nm3 anaerobic reactor that uses wastewater and
wet cake from a starch factory as feedstock to produce 120 000 Nm3 of biogas, of which:

 50 000 Nm3 of biogas substitutes fossil fuels, and up to

 62 000 Nm3 of biogas is used produce 6 MW of electricity ( together “Products”).
 Surplus biogas is flared

Both Products are sold at a discount under long-term agreements to corporate offtakers,
i.e. the adjacent starch factory and the biogas upgrading plant.

The technology is Hybrid Covered Lagoon Bio Reactor (“HCLR”), which is the next generation
anaerobic reactor with increased flexibility in operations, higher methane yield, and
improved wastewater treatment efficiency as proven by Project operating track record.

Figure 1 Picture of completed Northern biogas HCLR.

The generators are 4* GE Jenbacher 1.5 MW units modified for optimum performance and
containerized by AGGREKO Plc and leased to the project under a 5-year contract.

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Figure 2 GE Jenbacher 4 * 1.5 MW units leased from AGGREKO

The Projected was completed in phases with the first Commercial Operations Date (“COD”)
for biogas sales in August 2018, follow by electricity sales COD in March 2019.

Biogas sales kWH sales

03.08.2018 11.03.2019

Figure 3 Commercial Operations Dates of biogas project

Currently electricity production is 4-4.5 MW, matching with demand. Significant amount
of biogas is flared. Upon approval of Wheeling program , i.e. the peer-to-peer sales though
the grid, electricity production will be increased to 6 MW.

1.1.1 Business Model

The Project is adjacent to one of Thailand’s largest starch factories that supplies its wastewater and
residual biomass as feedstock for biogas production as summarized in figure below:

Figure 4: Business Model

Food/Medical
Plantation and Small
Host Factory Companies/Paper
Framers
industry
Host Factory delivers SPV sell biogas and kWH
wastewater and wet back to Host Factory
cake to SPV
Biogas and
Water Processing kWH
and Biogas Plant RE Biofuels/others
("Biogas Plant")

Cleaned Water

Host Factory Open Agriculture/local

Ponds Cleaned Water Rivers/Lakes

Starch factory process

Biogas Project

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The wastewater and wetcake produced by the factory are treated in the newly built Water
Processing and Biogas Plant. (“Biogas Plant”). The Biogas plant produces energy that is sold
as raw biogas, and electricity to the starch factory, the upgrading plant and others. The
effluent of the Biogas Project is returned to the open ponds of the starch factory. The
Process flow of the Biogas Project is illustrated further below:

Figure 5 Process flow of Northern Biogas Project

The biogas is produced by a biological process called anaerobic digestion. In the absence of
the Biogas Project the same process would produce biogas in the open ponds of the starch
factory. (Bottom-left corner of graph). Prior to the Biogas Project those open ponds
represented the starch factory’s entire wastewater treatment process. In the absence of
the Project, biogas would be vented in those Open ponds to the detriment of locals living
in the vicinity of the project, and the efforts to slow global warming. The Biogas Project
captures and combust all the biogas, substitutes fossil fuels with it and produces electricity
as summarized in table below:

Use of Biogas Nm3/year

kWH production 55% 16,542,654
Biogas production 44% 13,370,023
Flare 1% 165,980
30,078,657

Figure 6 Use of Biogas at full operations in 2020

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As per figure, at full scale operations more than half the biogas will be combusted to
produce 6MW of electricity, 44 % is sold as substitute fuel to heavy fuel oil, and natural gas,
while 1 % surplus will be flared.

The hazardous wastewater of the starch factory is cleaned to 99% efficiency by the Biogas
Project prior to release to the open ponds. The effluent of the reactor is good irrigation
water, as it is rich in macronutrients.

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2.0 OFFTAKERS

Sales of biogas and electricity are over long-term corporate offtake agreements to
adjacent starch factory as first priority, and as second priority over a 10 contract to RE
Biofuels, the biogas upgrading plant. Surplus energy will be converted to electricity and
sold by wheeling to Third party. T-VERs will be sold when offset market becomes
obligatory in 2021 to Thai buyer.

Revenue USD/year
Petchtara 3,055,334 67%
RE Biofuels 326,764 7%
kWh sale to third party* 1,164,467 26%
TVERS 0 0%
Total 4,546,565 100%

Figure 7 Revenue impact of each offtaker in 2020

2.1 Petchtara Co., LTD - feedstock supplier and energy offtaker

Petchtara Co., Ltd (“PTR”) is a 600 tons per day starch factory producing 130 000 to 150
000 tons native starch for export markets, mainly China.

PTR was acquired in 2012 by TING HSIN International Group (“THI”), a major manufacturer
and distributor of food industry in China, and Roi Et Group (“REG”). THI has annual revenues
of USD 10 B, with cash flow of 0.5 B USD. REG is the leader in Thailand’s starch industry with
more than 4 decades of starch factory operating experience. Currently REG operates 7
starch related companies in Thailand:

1. Sima Interproducts Co,. Ltd., produces and exports flour. Cap. 400
tons/day,est.1997
2. Roi Et Flour Co., Ltd., produces and exports flour. Cap. 800 tons/day,est. 1985
3. Kalasin Flour Co., Ltd. produces and exports flour. Cap. 800 tons/day,est.1989
4. Petchthara Co., Ltd. produces and exports flour. Cap. 600 tons/day,est.2012
5. P V D International Co., Ltd. produces and exports flour. Cap. 800 tons/day,est.
1997
6. Energy Plus Co., Ltd. produces and sells electricity from starch factory, est 2006
7. Carbon Energy Co., Ltd. Produces and sells biogas. est.2010

In short, PTR shareholders represent a combination of 1) generations of starch business

knowhow and 2) a rock-solid financial position.

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The PTR factory employs 170 employees, operates 24 hours a day (3 shifts). PTR has a good
credit rating by its banks as evidenced by very low interest charge at MLR-1.75% thanks to
their consistently profitable operations, low gearing, high asset/debt ratio, solid financial
strength and long track record of owners. The key customers of PTR include THI, Taiwan
Rikkei Trading Corp., Taiwan, PT. Sorini Agro Asia Corporindo TBK, Indonesia, LE Chou
Entreprise Co.,Ltd, Taiwan, Taiwan Fructose (M) SDN BHD., Malaysia, Guangxi Herun Starch
Co.,Ltd , China.

Mrs. Ampai Jaruwattanakul, PTR Managing Director, has over 30 year experience in the
starch industry. She is on the Board of Directors of 7 companies, five of those being starch
companies. Furthermore, she is a vice president of Thai Tapioca Starch Association. Her
vision is to build a starch complex consisting of multiple starch factories at the same location
as PTR.

2.1.1 Summary of sales terms to Petchtara

NBL sells biogas and electricity to PTR for a period of 12 years, at significant discount to
market rates as follows:

 Electricity price discount: -15% to PEA prices

 Biogas price discount: -20-35% to equivalent Heavy Fuel Oil cost

In addition, PTR is entitled to 20% of the revenues of biogas sales to third party and 15%
of any electricity sales.

2.1.2 Benefit to Petchtara from biogas project

The biogas project delivers cost savings and additional revenue to Petchtara amounting to
without requiring any investment on PTR part. At the end of the period, the project will
be transferred to Petchtara for free.

USD benefit to Petchtara of biogas project

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Biogas discount 170,752 412,479 589,434 601,223 613,247 625,512 638,023 650,783 663,799 677,075 690,616 704,429 658,641
Transportation cost 16,187 145,946 194,244 194,244 194,244 194,244 194,244 194,244 194,244 194,244 194,244 194,244 178,057
KWH Discount 0 200,095 346,001 352,921 359,979 367,179 374,522 382,013 389,653 397,446 405,395 413,503 386,625
Share of biogas to RBF 0 10,795 50,480 67,389 68,737 70,111 71,514 72,944 74,403 75,891 77,409 78,957 3,230
Share of kWH to RBF 0 3,600 22,032 22,472 22,922 23,380 23,848 24,325 24,811 25,307 25,814 26,330 185,173
Share of TVERs 0 0 0 296,304 117,718 120,073 122,474 0 0 0 0 0 0
Share of3rd party sales 0 0 106,141 108,264 110,429 112,638 114,891 117,188 119,532 121,923 124,361 126,848 129,385
Terminal value 0 0 0 0 0 0 0 0 0 0 0 0 0
Total PTR benefit 186,939 772,916 1,308,332 1,642,817 1,487,277 1,513,137 1,539,515 1,441,497 1,466,442 1,491,886 1,517,839 1,544,311 1,541,112
Cumulative benefit to PTR 186,939 959,855 2,268,187 3,911,004 5,398,281 6,911,418 8,450,933 9,892,430 11,358,872 12,850,758 14,368,597 15,912,908 17,454,019

Note: entire project transferred to PTR in November 2030 unless BOOT period extended.

Figure 8 Monetary benefit to PTR (starch factory)

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The monetary benefit to Petchtara is 17 million USD in the first 12 years. It is clear that the
project is successfully structured as a win-win deal. In addition Petchtara has benefitted
from the Project in the form of greatly improved relations with locals due to reduced
smell, air and water pollution are discussed in chapter 6.

2.2 RE Biofuels Company Limited -the biogas upgrading plant

RE Biofuels Company Limited (“RBF”) owns and operates a biogas upgrading station and a
gas station adjacent to the NBL biogas project. RBF upgrades 20,000 Nm3 of raw biogas to
9 tonnes of compressed biogas (“CBG”). The CBG, a fuel is equivalent to Natural Gas
Vehicle, is sold to trucks and cars at RBF pumpstation.

Figure 9 Biogas upgrading plant and CBG pumpstation

RBF is owned by:

Sakol Energy Public Company Limited (“SKE”) which is listed on the Stock Exchange of
Thailand, which owns 75%

RE Power Group, a renewable power developer focusing on biogas, biomass and biofules.
RPG has a 15% ownership stake. RPG also owns the majority of Northern Biogas Limited.

Fasan Woodchip, a local transportation company with a fleet of NGV/CBG trucks, with a
10 % ownership stake.

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2.2.1 Summary of sales term to RE Biofuels

Electricity is sold to RBF at market price over 10-year PPA. In addition, NBL Sells biogas to
RBF for 10 years at a price of THB 1.755 (USD 0.054)/Nm3@55%CH4.

2.3 Third party buyer - kWh by wheeling

Following in the footsteps of German model, Thailand is proceeding to allow wheeling in

2020.

Wheeling refers to selling electricity from business to business without direct connection
by transferring the electricity through the grid to customer. Wheeling will allow sales to
any corporate offtaker under a Power Purchase Agreement (“PPA”) at price agreed with
offtaker. A wheeling charge will be paid to grid operator as compensation for the using the
grid for transferring the electricity.

The Thai wheeling program is currently in testing phase. NBL is the exclusive biogas
location where wheeling will be piloted as approved by PEA (grid company), and ERC
(regulator). PEA/NBL have together identified 50 MW of potential wheeling offtake within
50 km from NBL project site. PEA is currently contacting potential Wheeling clients for
NBL. Replies from Client are expected in October, and contracts are expected to be signed
by end of the year.

2.3 Third Party - tVER buyer

The NBL Project has been approved and registered as a GreenhouseGas reduction project
under Thai Emission Trading Mechanism ( “T-ETS”). First versification is ongoing, with first
VER issuance in Q12020. For 7 years, the Project will be allocated carbon credits called
TVERs for significantly reducing emissions.

The T-ETS is voluntary until January 1th 2021, when Thai companies will have the obligation
to offset their GHG emissions. The TVERs of the project will be sold in 2020, with expected
price THB150 (USD 5) each. This price is in line with US, UK, Australia, and China where
price is USD5-USD25/ton as well as in line with voluntary transactions in Thailand.

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NBL plan is to accumulate the TVERs until 2021 when voluntary trading becomes
obligatory. Out expectation is that demand will greatly outweigh supply.

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3.0 Technology

Biogas reactor

The biogas reactor is of Hybrid Covered Lagoon Reactor (“HCLR”) technology, the new
generation of Covered Lagoon Reactors that combines the best attributes of the top two
previous technologies Anaerobic Baffle Reactors (“ABR”), and Plug Flow Reactors (“PFR”)
in one reactor resulting in improved:

 flexibility in operations,
 better methane yield,
 increased economies of scale, and
 improved wastewater treatment efficiency.

Figure 10 Hybrid Covered Lagoon Reactor

The HCLR comprises of a uniquely designed anaerobic lagoon process, dual feeding
system, sludge management system, baffles and a HDPE cover. The HCLR is monitored and
controlled using a SCADA system to optimize wastewater contact with anaerobic bacteria
and to maintain the most favorable environment (including pH, temperature, alkalinity,
TSS, OLR, HRT) for biogas production. The HCLR system optimizes the mixing process to
separate and capture biogas, which is then collected in pipes, dewatered, stripped of H2S
and fed to dedicated biogas engines.

Biogas Treatment Process

The treatment system consists of dewatering tank, blower, chiller and cyclone separator
to remove moisture in biogas stream before supplying to the engine-generator or burner.
This further assists in reducing corrosion in the biogas plant.

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Bio-Scrubber

Three biological scrubber are used to remove the H2S in the biogas steam before feeding
the biogas to the gas engines engine or selling it to upgrading station. Total flow that
needs to be treated is 80 000 Nm3/day as gas. Each bio scrubber is capable of treating a
flow of 1400 nm3/h and reducing the H2S from 4000 to below 200 ppm. Total flow that
can be treated @4000 PPM is thus 4200 Nm3/h or 100,800 Nm3 of biogas per day.

Biogas Burner

Biogas is used to replace heavy fuel oil to dry starch in drying process of the starch factory.
Burners are of duel fuel type capable of producing heat from both heavy fuel oil and
biogas.

Flare System

Any excess biogas in the system is burned to address safety concerns. The Project includes
an enclosed flare with flame and temperature sensors to ensure efficient destruction of
the flared biogas.

Gen sets

The generator sets consist of 4* 1.5 MW GE Jenbacher units as containerized and

modified by AGGREKO for optimal performance. The gen sets have an excellent efficiency
of 42%, and use on average 430 Nm3 of biogas per kWh.

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4.0 Investment cost

The total project investment cost was THB 11.3 million, as per following table:

Investment cost
Biogas power plant (195 000nm3, 6 MW) 9,584,528
VAT 609,496
Biogas power plant cost with VAT 10,194,024
Payment to aggreko (mobilization) 165,149
Payment tp Aggreko (advance payment guarantee) 185,625
Shipping 135,114
Interest During Construction ("IDC") 288,206
Fees (LTA, Lawyer, etc) 312,500
Contingency 54,344
Total 11,334,963

Figure 11 Project Investment Cost

The fixed price EPC efficiently mitigated the risk of cost overruns, as is typical for project
finance structures. New generators will be bought in 2023 once the Aggreko lease
contract for 6 MW comes to term.

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5.0 Operations and maintenance

The Operation & Maintenance (O&M) of the HCLR will be done for 12 years at fixed price
by RE Power Service (“RPS”).

RE Power Service Company Limited (“RPS”), a Thai company focused on engineering,

procurement, construction and operation of renewable energy projects, mainly biogas
and biofuels. RPS team has implemented a fleet of 9 biogas projects, that have won
awards such as Crown Standard, Thai Energy Award, and ASEAN Energy Award, and are
both ISO 9001 and ISO 14001 accredited. RPS is owned by Ratchar Pathamapongsar, Pajon
Sriboonruang and Gustaf Godenhielm whom each have more than 14 years’ experience in
biogas construction and operation. RPS built the Northern Biogas project as a fixed price
Engineering, Procurement, and Construction (“EPC”) Project on time and within budget.

“The key team’s experience can be considered as excellent providing good

ground for successful execution of new Korat project:

Poyry, Lenders Technical Advisor

The price for O&M of the Northern Biogas project is USD460 000 (THB 14.2 million) per
year, escalated at 3 % annually. Under the agreement RPS provides the staff, spare parts,
R&D, Nutrients, manages the operations, and pays all HCLR related O&M costs including
the wet cake management. RPS will also operate the gen sets under AGGREKO supervision
and remote access.

All consumables, spare parts, lube oil for the gen sets are provided by AGGREKO at a fixed
weekly price of USD 20 000 (THB 660,000) per week.

Other than the above fixed cost, Northern Biogas pays USD 46 000 (THB1.5 million) per
year in salaries to staff.

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6.0 Shareholders

Northern Biogas has the following shareholders:

Number Ownership
Investor of shares percentage
RPG 965,572 63.52%
EfE 500,000 32.89%
Private persons 54,428 3.58%
Total 1,520,000 100.00%

Figure 12 Ownership structure

RE Power Group Company Limited (“RPG”), a Thai renewable energy project developer
focusing of biogas, biofuels, biomass and solar projects. RPG owns 63.5% of Northern
Biogas. RPS is owned by Ratchar Pathamapongsar, Pajon Sriboonruang and Gustaf
Godenhielm.

Energy For Environment Foundation (“EfE”), is funded by Ministry of Energy Thailand and
lead by Dr. Piyasvasti Amranand (former Minister of Energy, Thailand). The investment in
Northern Biogas by EFE is its largest equity investment through its 18 year history. EfE
major objective is “to forge ahead with the implementation of activities in support of the
(Thai) government’s energy policy.” EfE owns 32.9% of Northern Biogas.

The remaining 3.58%, which are non-voting shares, is owned by private persons.

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7.0 Technical review

The Project assumptions were reviewed prior to construction by Poyry Oy (“Poyry”,

www.poyry.com”) who issued a technical due diligence report for Lenders on the Project
in January 2018. In general they concluded that assumptions made by NBL were
conservative with a high probability of being fulfilled of exceeded. The following chapters
summarize the key assumptions confirmed and compares project performance in first
months versus such assumptions.

7.1.1 Starch factory operations /feedstock supply

Following a review of PTR operations, cassava availability and flood history of the area,
Poyry concluded that the following assumption for PTR starch factory operations can be
considered conservative:

Factory Starch production

Factory Capacity (tpd of starch) 600
Plant operating days (d) 264
Capacity factor (% of nominal capacity) 80%
Average starch production (tpd) 479
Starch factory production in 2019 (tpy of starch) 126,492
Wastewater generation
WW/starch ratio (m3) 13.34
Daily wastewater (m3) 6,392
Annual wastewater (m3) 1,687,403
COD (mg/l) 21,999
Annual COD kgs from Wastewater (kgs) 37,121,185
Biomass generation
Wet cake Yes
Ratio of roots/starch (t) 4.00
Cassava roots (t) at max capacity 2,400
Wet cake percentage (%) 38%
Wet cake per day (t) at max capacity 912
Wet cake per year (t) 192,268
Fuel demand for drying starch in boilers
Before project - Heavy Fuel Oil ("HFO") per tonne of starch (l/tonne of starch) 32.76
Burner average daily usage (HFO l/day) 15,697
Yearly use of HFO (l) 4,143,878
Equivalent biogas amount (Nm3) 7,599,033
Electricity demand of starch factory
KWH consumption/tonne of starch (kWH/t of starch) 180.93
Total demand based on starch production (KWH/year) 22,886,198
Required biogas for production (Nm3/year) 10,337,814
Expressed in HFOe (l) 5,637,380
Average kWh per day (kWH/day) 86,690
Consumes biogas per day (Nm3/day) 39,158
average MW 3.61

Figure 13 Biogas production related assumptions confirmed by TA

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On the feedstock production side, starch factory average operation in 2019-> is 126 500
tonnes of starch production per year leading to annual wastewater production of
1,687,403 Nm3 and 192,268 tonnes of wetcake produced per year. On the energy
demand side, starch factory confirmed energy demand is 7,600,000 Nm3 of biogas, and
22,886,198 kWh of electricity.

7.1.2 Projected Energy Production

Based on Poyrys expertise on biogas project performance in general and the Project
developers past biogas projects track record, Poyry confirmed that the following
assumptions are conservative:

Biogas from wastewater

Yiled (CH4 m3/COD kgs in to reactor) 0.224
Annual CH4 production (m3) 8,315,145
Annual biogas production (m3) 13,858,576
Percentage of total biogas (%) 52%
Biogas from wetcake
Available wetcake from PTR (t/year) 192,268
Usage ratio (%) 100%
Used wet cake (t/year) 192,268
Import of wet cake (t/year) 0
Wet cake to reactor (t/year) 192,268
NM3 of CH4 per t cake (Nm3/t) 40.00
NM3 of biogas per t cake (Nm3/t) 66.67
Daily Nm3 of CH4 (Nm3/day) 36,480
Daily Nm4 of biogas (Nm3/day) 60,800
Annual CH4 production (Nm3) 7,690,714
Annual biogas production (Nm3) 12,817,856
Percentage of total biogas (%) 48%
Total per year
CH4 (Nm3/year) 16,005,859
Biogas (Nm3/year) 26,676,432
HFOe (l/year) 14,657,380
Possible electricty generation with biogas (kwh per year) 59,504,891
Possible electricty generation with biogas (MW) 9

Key number in table above are bolded for convenience. Based on the confirmed
conservative yield of 0.224 of CH4 Nm3 per COD kgs, and 40 Nm3 of CH4 per tonne of
wetcake the annual Biogas production of the project was confirmed to be 26 650,000
Nm3. Actual numbers have been significantly higher, with biogas yield at 0.3++ of CH4
Nm3 per COD kgs

This amount of biogas would suffice to run 9 MW of gen set full time, however as there
are significant other uses of biogas suitable capacity of 6 MW was chosen for this project.

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7.1.3 Biogas project actual performance versus projections

As the commercial operations date of the first phase of the project was in August 2018, 7
months of operating data exists already. In general the actual performance has been
significantly better than the conservative numbers confirmed by Poyry. As those numbers
were for lenders, not equity providers, this was to be expected.

The table below presents the biogas generation on monthly basis.

Actual Yield versus LTA confirmed 0.224

0.4000

0.3500

0.3000

0.2500

0.2000

0.1500

0.1000

0.0500

0.0000
AUG SEP OCT NOV DEC JAN FEB

The graph above compares the actual biogas productivity, i.e. biogas yield versus the
conservative target yield confirmed by Lenders Technical advisor Poyry. Actual yield
reached target yield in the first month of operations and has since surpassed it by 20-
50%. Actual methane yield has been 0.28-0.35 Nm3 of CH4/COD kgs. The higher biogas
productivity is accredited to the design improvements of the HCLR, compared to older
generation of anaerobic reactors. In financial model a yield of 0.28CH4 per COD kgs has
been assumed.

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The graph below Show the Revenues and EBITDA % since start of Projects:

Project financial performance 2019

10,000,000 70.00%
9,000,000
60.00%
8,000,000
7,000,000 50.00%
6,000,000 40.00%
5,000,000
4,000,000 30.00%
3,000,000 20.00%
2,000,000
10.00%
1,000,000
0 0.00%
AUG SEP OCT NOV DEC JAN FEB MAR

Revenues Costs EBITDA EBITDA %

Figure 14 Biogas Project revenue and EBITDA since COD

Already in first quarter of operations, revenues from biogas sales alone reached THB 4-6
million level, with EBITDA reaching targeted 50-60%. Thanks to COD of Phase2 in early
March, the revenues increase significantly.

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8.0 FINANCIAL SUMMARY

See exhibit 13 for summary of Income statement

Income statement (USD`000)

2018 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E
Total Revenues 683 1,836 4,458 6,308 5,549 5,660 5,773 5,888 5,284 5,390 5,498 5,608 6,067
Total Operating costs 318 1,434 1,758 1,774 1,790 1,806 1,212 1,249 1,286 1,325 1,364 1,405 1,347
EBITDA 365 402 2,700 4,534 3,759 3,853 4,561 4,640 3,998 4,065 4,133 4,202 4,720
Depreciation 133 799 799 799 799 799 799 799 799 799 799 799 666
EBIT 232 -397 1,901 3,735 2,960 3,055 3,762 3,841 3,199 3,266 3,334 3,404 4,054
Interest 74 492 325 268 212 155 99 42 7 0 0 0 0
Taxes 0 0 0 0 0 0 0 0 553 565 576 587 715
Net Profit 158 -889 1,577 3,467 2,749 2,900 3,663 3,799 2,639 2,701 2,758 2,816 3,340

Figure 15 Key financial figures

See exhibit 14 for summary of key financial rations.

Profitability ratios
2018 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E
EBITDA margin 53% 22% 53% 63% 61% 61% 72% 72% 68% 67% 67% 67% 70%
EBIT margin 34% -22% 35% 51% 46% 47% 58% 58% 52% 52% 52% 52% 59%
Net Profit margin 23% -48% 27% 47% 43% 44% 56% 57% 42% 42% 42% 42% 47%
Return on assets 2.2% -8.7% 11.9% 28.8% 23.2% 24.6% 32.0% 33.2% 21.7% 22.2% 22.6% 23.0% 28.0%
Return on equity 3.3% -18.7% 25.6% 61.8% 49.9% 52.8% 68.6% 71.2% 46.6% 47.6% 48.5% 49.4% 60.2%

Figure 16 Key financial ratios

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9.0 Impact of Project

The Project has an exceptionally strong positive social, environmental and developmental
impact. Measured in term of carbon yield (GHG reduction/capex), the impact of biogas
projects are 20-30 higher than solar or wind projects.

However, the impacts of biogas projects are significantly more wide-reaching than simply
a reduction of Greenhous gases.

Expressed in terms of the UN Sustainable Development Goals (“UN SDGs”), the Project
contributes towards 14 of the 17 UN SDGs:

Figure 17: 14/17 UN SDGs that the Project contributes towards

3.0.1 Background

Ago-industry factories in South East Asia commonly treat their wastewater in open ponds.

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Figure 18: Pictures of Open ponds of agro-factories

Such ponds cause the following problems:

Environmental Problems

- AIR POLLUTION. Those ponds cause very high air pollution as the gases are vented.
Those gases include CH4 and H2S that can be lethal in small quantities, and are a threat to
health of humans and fauna living close to Project.

- CLIMATE CHANGE. So-called super pollutants ― greenhouse gases far more potent, but
less prevalent, than carbon dioxide ― could be the most efficient way to slow the rate of
near-term global warming. Methane, that is released by open ponds of agro factories, is
one of the worst. Methane is 86 times more powerful than CO2 over the first 20 years in
the atmosphere. (REF: UN IPCC)

- POLLUTION OF WATER BODIES. Periodically open ponds wipe out entire aquatic
ecosystems when leaking into rivers or lakes. Such catastrophes have killed hundreds of
thousands of fish repeatedly.

Development problems:

HEALTH PROBLEMS. The pollution can cause asthma, miscarriages and other health
problems

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JEOPARDIZED LIVELIHOOD of farmer and fishermen. Wastewater spills into the river
threatening the local’s livelihoods in farming, and fishing.

The Project is tremendously relevant for local communities as it contributes toward the
following SDGs:

1) GOAL 1: NO POVERTY, as Project is in poorest Thailand and it 1)

improves rural infrastructure, 2) makes energy more affordable, 3)
and slows global warming which affects poor people the most

2) GOAL 2: ZERO HUNGER, as Project protects the Moon river - the

main water resource of local - provides a liquid fertilizer and
protects livelihoods (such as fishing and farming) of locals.

3) GOAL 3: GOOD HEALTH AND WELL-BEING, by dramatically

reducing and preventing air, soil and water pollution, protecting
locals health and livelihoods and providing savings in energy cost to
the poorest.

4) GOAL 5: GENDER EQUALITY, as access-to-energy and affordable

clean energy is vital for women’s development in terms of reducing
their time burden for collecting firewood used in cooking and
heating, supporting livelihoods activities, improving health and
wellbeing, and by providing opportunities for enterprise, equal
employment, and capacity-building.

5) GOAL 6: CLEAN WATER, by treating wastewater to 99% efficiency,

by protecting groundwater and surface waters and increasing
water use efficiency.

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6) GOAL 7: AFFORDABLE AND CLEAN ENERGY, by providing energy

infrastructure and replacing fossil fuels with clean biogas. The
Project can be seen as a catalyst for growth and replication for new
similar CBG and/or HCLR projects.

7) GOAL 8: DECENT WORK AND ECONOMIC GROWTH, by providing

tens of long-term jobs, providing tax revenue from new indigenous
energy source, protecting locals livelihoods from wastewater spills,
and facilitating energy cost savings for starch factory which lead to
improved competitiveness. Infrastructure projects have a
multiplier effect of 2.5 (REF: S&P)

8) GOAL 9: INDUSTRY, INNOVATION AND INFRASTRUCTURE, by

providing rural infrastructure, improving resource efficiency, by
providing Thailand with its first demonstration plant for 1) HCLR, 2)
CBG plant, 3) renewable energy pump station, and by
strengthening the cassava factory.

9) GOAL: 10: REDUCED INEQUALITIES, by providing inclusive

economic growth, that involves the three dimensions of
sustainable development – economic, social and environmental
dimensions, and by making energy more affordable in poorest
Thailand.

10) GOAL 11: SUSTAINABLE CITIES AND COMMUNITIES, by protecting

locals from water related disasters, air pollution and any associated
economic and health problems. By providing a clean energy
alternative.

11) GOAL 12: RESPONSIBLE CONSUMPTION AND PRODUCTION by

ensuring efficient use of water and natural resources, by reducing
waste, protecting water resources, and by providing sustainable
infrastructure.

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12) GOAL 13: CLIMATE ACTION, by reducing emission of GHG by more

than 3,000,000 ton over the lifetime of project. By capturing
methane that is 86 times more harmful to environment than CO2
in the next 20 years. (REF: UN IPCC report)

13) GOAL 14: LIFE BELOW WATER, by preventing water pollution

locally and slowing down global warming that is threatening to
eradicate corals of the oceans, and those depending on them.

14) GOAL 15: LIFE ON LAND, by improving agriculture by provision of

liquid fertilizer, by reduction of pollution, and protection of inland
freshwater ecosystems.

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5.0 RISK ANALYSIS

The Project has been developed according to project finance principles, with key risk
mitigated by contractual agreements and risk transferred to third parties as illustrated in
figure below.
Figure 3: Risk mitigation as per project finance principles

RPS

Risk: Operations Mitigation

Cost Overun Risk Fixed price O&M
Agreement

Risk: Feedstock Price

Risk: Offtake
PTR Mitigation: 12 year NBL Mitigation: 12 PTR
agreement ensuring
year offtake
free feedstock
agreement with
Risk: Construction
indexed price
Cost Overun Risk

Mitigation:
Fixed price EPC
Agreement

RPS

7.1 PRE-OPERATING RISKS

7.1.1 Completion risk: Technology and Timing

Completion risk refers to the possibility that the technology does not yield the expected
output and that construction falls behind schedule or is never completed.

Classification: N/a

Mitigation: Project was completed on time and within budget. Risk is no longer relevant.

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7.2 OPERATING RISKS

7.2.1 Feedstock Risk – Price

The price of the feedstock, i.e. wastewater and wetcake, may change.

Classification: N/A

Mitigation: As per the BOOT agreement the feedstock is free throughout the 12 year
Project period. Project gets all feedstock in exchange of giving a discount to energy prices.
The amount of discount depends of heavy fuel oil and electricity price in Thailand. With
regard to other feedstock, prices can be controlled as there are many sources available.

7.2.2 Feedstock Risk – Quantity (Host Company business risk)

The availability of the primary input wastewater and production of biogas is largely
dependent on the Host Company continuing business as normal throughout power plant
investment.

Classification: Low

Mitigation: Host company risk cannot be perfectly mitigated but has to be accepted as a
client/market risk, a typical business risk. While this risk normally would be categorized as
a medium level risk, in this case due to 1) the excellent track record and decades of
success in the starch industry of PTR Management Team 2) quality of the starch factory
itself, 3) the strong economic benefit PTR received due to project, and 3) the automatic
extension to the BOOT period by a factor of 125% for any shortfall in COD, the risk of
lower than expected operation of starch factory can be considered low.

The risk can be mitigated by import of other feedstocks such as cow manure, pig manure,
wet cake or other as also noted by Technical Advisor.

7.2.3 Throughput risk - Biogas

The biogas yield from wastewater or wetcake may be lower than expected.

Classification: Low

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Mitigation: The biogas production estimates are based on the older generation biogas
reactors and can be considered conservative. In fact , those projections have already
proven conservative in actual operation as actual biogas production exceeds assumed
number by 25-50% in 2018. Furthermore, the plant has access to RPS extensive
experience, back office, and R&D capability.

7.2.5 Conflict of interest risk

Potential conflict of interest as Operator and project main shareholder are owned by the
same persons.

Classification: Low

Mitigation: Structure is similar to large power companies and their subsidiaries such as
EGAT which owns EPC and O&M company EGCO , and Chubu (Japan) that owns CEPT
which does O&M services for many of Chubu`s JVs. It is recognized that the financial
incentive in ownership is significantly stronger (to the extent that they are incomparable)
than it is in provision of services. What is more, the expected dividends and revenue from
ownership acts as a guarantee of best-in class O&M services, a much stronger guarantee
that any contractual guarantee clause in O&M agreement could achieve.

7.2.6 Oil price risk

Oil price may drop from current levels.

Classification: Medium

Mitigation: Only 32% of total revenues are indexed to oil price. A price drop of 10% only
affects EBITDA by USD 120,000 (THB 4 million). An increase of oil price boosts EBITDA by
same amount. Assumed oil price is average 2018.

7.2.7 Operation and maintenance cost overrun risk

Operation and Maintenance (“O&M”) cost may be higher than expected

Classification: Low

Mitigation: 12 year O&M agreement transfer this risk to RPS.

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