ecoAgricultural Biofuels Capital (ecoABC) initiative
Funding Proposal Guide & Template
A-General Information on the ecoABC Initiative ..................................... 4 ecoABC First Come, First Served Principle................................................... 5 Key Elements of the ecoABC program .......................................................... 5
a) Calculating ecoABC Repayable Contribution........................................................ 5 b) Agricultural Producer Investment........................................................................... 6 c) Significant Construction ......................................................................................... 6 d) Timing of Repayable Contributions ....................................................................... 7 e) Repayment of ecoABC Contributions .................................................................... 7
Security of Information................................................................................... 8 Use of (In-house or External) Lobbyist.......................................................... 9 Conflict of Interest Disclosure...................................................................... 10 Payment of Retroactive Costs....................................................................... 10 B-How to Prepare your ecoABC Proposal............................................... 11 SECTION 1 APPLICANT & PROJECT INFORMATION................. 11 SECTION 2 BUSINESS OVERVIEW .................................................... 12
a) An Executive Summary (Max 1-2 Pages) ............................................................ 12 b) Business Plan ........................................................................................................ 12 c) Technical Description of the Project .................................................................... 12 d) Project and Applicant Financial Information........................................................ 16
Declaration .................................................................................................. 19 ANNEX A – MANDATORY DOCUMENTS CHECKLIST ................. 22 ANNEX B - SAMPLE PROJECT GANTT CHART.............................. 23 ANNEX C – PROJECT INFORMATION AND COST TABLES ........ 24
TABLE 1 - Key Project Activities and Milestones .................................................. 25 TABLE 2– Estimated Cost Breakdown for the Project Period ................................ 26 TABLE 3 – Estimated Cost Breakdown – Direct Salary & Labour......................... 27 TABLE 4 – Estimated Cost Breakdown - CEAA Environmental Assessment........ 28 TABLE 5 – Estimated Cost Breakdown - Site Work/Preparation............................ 29 TABLE 6 – Estimated Cost Breakdown - Construction of Buildings ...................... 30 TABLE 7 – Estimated Cost Breakdown - Equipment & Systems ........................... 31 TABLE 8 – Estimated Cost Breakdown – Commissioning ..................................... 32 TABLE 9 – Estimated Cost Breakdown - Other Direct Costs ................................. 33 TABLE 10 – Listing of Eligible Agricultural Producer Investors........................- 34 TABLE 11 – Total Project Funding Sources........................................................- 35 TABLE 12 – Expected Buyer of Biofuel and Co-product Information ...............- 36 TABLE 13 – Forecasted Repayment Schedule ........................................................ 37
ANNEX D - Agricultural Producer Investor Permission ....................... 38
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& Declaration Letters................................................................................. 38 ANNEX D-1 ................................................................................................. 39 ANNEX D-2 ................................................................................................. 41 ANNEX D-3 ................................................................................................. 43 ANNEX D-4(a)............................................................................................. 45 ANNEX D-4(b)............................................................................................. 47 ANNEX E - ecoABC Project Costing Principles ..................................... 49 ANNEX F – Glossary of ecoABC Terms .................................................. 53 ANNEX G - Frequently Asked Questions ................................................ 57
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Revisions – Document History
Revision V1.0 Date August 16, 2007 Description of Revision Version that was sent to all applicants during the month of August. Major revisions to the document. Significant amount of content deleted. V.3.0 V.4.0 October 15, 2007 Significant changes All All November 30, 2007 Major revisions to the document. Significant amount of content deleted. First version available on the ecoABC website. Pages Affected N/A
V2.0
September 1, 2007
All
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A-General Information on the ecoABC Initiative
ecoABC First Come, First Served Principle The ecoAgriculture Biofuels Capital (ecoABC) initiative of Agriculture and Agri-Food Canada (AAFC) operates on the principle of “first come, first served” whereby the order of funding is established when an applicant has: • • • • submitted all documentation required in the ecoABC Funding Proposal Guide; demonstrated that the project meets all eligibility criteria; completed the environmental assessment process; and agreed to sign the standard ecoABC Contribution Agreement contingent upon
AAFC approval of the funding. The Letter of Interest is not used to determine the “first come, first served” order of applications. Key Elements of the ecoABC program a) Calculating ecoABC Repayable Contribution The ecoABC contribution is calculated in terms of an incentive rate in cents per litre multiplied by the increase in the annual production capacity (nameplate capacity) of the renewable fuels facility. The minimum rate of ecoABC contribution, at the minimum eligible agricultural producer investment in the project of five percent (5%) of the Eligible Project Costs, is eight cents per litre (8 ¢/L). The ecoABC incentive rate increases based on the levels of agricultural producer investment to a maximum of 20 cents per litre (20 ¢/L) production capacity. Sample Calculation of Contribution Rate: The ecoABC contribution rate, in cents per litre (¢/L) of nameplate capacity = 100 times (.8 times (the equity investment by agricultural producers divided by the eligible project costs) plus $0.04). For example, if the equity investment by agricultural producers was $15 million towards $100 million of Eligible Project Costs, the contribution rate in cents per litre would be: 100 × (.8 × (15,000,000/100,000,000) + .04) = 16 cents per litre contribution rate.
The maximum ecoABC contribution is then calculated by multiplying the contribution rate by the forecasted annual production capacity to a maximum of $25 million per funded facility or 25 percent (25%) of eligible project costs, whichever is less. If the
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above example contribution rate was applied to a 100 million litre nameplate capacity facility, the ecoABC contribution would be $16 million ( 16 ¢/L x 100 million litres = $16 million). If it was applied to a 200 million litre nameplate capacity facility then the ecoABC contribution would be $25 million: sixteen cents multiplied by 200 million litres would equal $32 million (16 ¢/L x 200 million litres = $32 Million), however, the $25 million funding limit would be applied. Important Points to Note: • The contribution amount calculated for the purposes of the ecoABC Contribution Agreement is based on the estimated eligible project costs submitted as part of this proposal. It represents the maximum contribution amount that will be paid to the recipient. If the actual nameplate capacity turns out to be less than the forecasted nameplate capacity was at the time the Contribution Agreement was negotiated, the ecoABC contribution would be reduced to reflect the actual nameplate capacity. If the actual nameplate capacity turns out to be less than the minimum volume acceptable under ecoABC (3 million litres per year for biodiesel facilities and 5 million litres per year for fuel ethanol facilities), the recipient becomes ineligible to receive the ecoABC funding and the contribution agreement would be terminated. b) Agricultural Producer Investment To be eligible for ecoABC contribution, projects must have Agricultural Producer Investment (see Annex F - Glossary of ecoABC Terms) in the project equal to or exceeding five percent (5%) of the eligible project costs. If, prior to the two year anniversary of the commencement of biofuel production at nameplate capacity, the agricultural producer equity investment falls below the level used to calculate the ecoABC contribution specified in the Contribution Agreement, the contribution will be reduced to reflect the actual producer equity investment in the project. The recipient would be required to repay any difference between the contribution paid and the adjusted contribution. If the agricultural producer equity investment falls below the minimum acceptable 5 percent (5%) of eligible project costs before the two year anniversary of commencement of production at nameplate capacity, the recipient becomes ineligible to receive the ecoABC funding and all contributions paid to the recipient would have to be repaid. c) Significant Construction Substantial progress towards the completion of the proposed project work plan will be specified in the ecoABC Contribution Agreement and must occur within 120 days of
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its signing or the Agreement will be terminated. The elements that comprise the achievement of Significant Construction are defined in Annex F - Glossary of ecoABC Terms. The applicant must provide a list of expected construction activities and milestones in Table 1, Item 2 of Annex A expected to occur in the first 120 days following the signing of the Contribution Agreement. These milestones may be updated and revised between the two parties prior to their inclusion in the Contribution Agreement. d) Timing of Repayable Contributions The payment of ecoABC repayable contributions will be made to the recipient only after the biofuel facility has commenced producing the biofuel at its certified nameplate capacity. Payment is triggered by the recipient’s submission of a final project report consisting of the following: 1. a commissioning report, signed by a professional engineer registered in Canada that states the date of the commissioning and the nameplate capacity of the project; 2. the percentage of Agricultural Producer Investment in the project at commissioning; 3. confirmation that the biofuel is produced from the agricultural feedstock(s) as identified in the contribution agreement; 4. confirmation that any environmental mitigation measures required by the federal Environmental Assessment report have been taken. e) Repayment of ecoABC Contributions The total amount contributed to a recipient is repayable under conditions of profit after a three-year grace period. The first repayment is due on January 30th, in the fifth calendar year after the year in which the funded facility commences production at its nameplate capacity, and continues for six subsequent years or until repayment totals the amount of the contribution made to the recipient, whichever comes first. For each calendar year, the recipient repays an amount calculated as of December 31st of the previous year as follows:
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Formula for Calculating the Annual Repayment Amount (Average Gross Income Per Litre* minus $0.20 per litre) times the total biofuels produced in the previous twelve months times 0.25. If the Average Gross Income Per Litre is $0.20 or less, the repayment for that year will be zero. *see Glossary of ecoABC Terms for definition of Average Gross Income per Litre. The following is an example of the repayment schedule for a plant that is commissioned in 2008:
No repayment obligation Year 0
Commissioning Date Occurs
Repayment period begins Year 4
Jan 1 to Dec 31st Calculation period for First Repayment
st
Year 1
1st Anniversary of Commissioning Date
Year 2
2
nd
Year 3
3
rd
Year 5
First Repayment due January 30th
Anniversary of Commissioning Date
Anniversary of Commissioning Date
Example: Commissioning Date: February 15, 2008 February 15, 2009 February 15, 2010 February 15, 2011 Jan 1 to Dec 31, 2012 January 30, 2013
First repayment is due on January 30th, 2013 and subsequent repayments are due on each January 30th up to and including January 30th, 2019 or until repayment of contribution is complete. Security of Information AAFC will not disclose commercially confidential information in relation to a proponent’s ecoABC funding proposal unless: • Authorized by the applicant; • Required by law to do so; or • Required by the Minister of AAFC to be released to an international or internal trade panel for purposes of the conduct of a dispute in which Canada is a party or a third party intervener.
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Agriculture & Agri-Food Canada
All documentation submitted through this application process is subject to the provisions of the Access to Information Act. Information on the Act is available at the following website: http://laws.justice.gc.ca/en/showtdm/cs/A-1. It is the applicant’s responsibility to clearly identify on any documentation it submits to AAFC what information is to be considered as commercially confidential. Please note that in providing information for the purposes of completing an environmental assessment (EA) that public participation is a guiding principle of the CEAA. To help promote public participation, Federal Authorities must establish a public registry, for every project that requires an EA, in which information on the EA of the project is placed and made available to the public. However, confidential information disclosed through the EA process can be protected under the Access to Information Act and Privacy Act. Proponents would be wise not to submit confidential information or to submit it under separate cover marked “confidential information”. If this information is confirmed to be protected information under the Access to Information Act and Privacy Act, it will not be disclosed to the public and thus would not be placed in the project file which is maintained for public information requests. Use of (In-house or External) Lobbyist Under the Lobbyist Registration Act, a lobbyist includes any person who receives payment or any other consideration for oral or written communication made to a public office holder. AAFC must be advised if the applicant engages a lobbyist to represent the applicant’s interest in relation to its request for support towards the proposed Statement of Work. As well, the lobbyist must be registered and in compliance with the Lobbyist Registration Act, and cannot be paid a commission, contingency fee or any other consideration that is dependent upon the execution of an agreement with AAFC for funding under ecoABC. These conditions are contained in the ecoABC contribution agreement therefore must be respected in order for an applicant to enter into an agreement with AAFC for funding under ecoABC. Furthermore, the payment of any type of contingency fee may give rise to a breach of Section 121 of the Criminal Code. Information on the Lobbyist Registration Act is available at the following website: http://laws.justice.gc.ca/en/L-12.4/. The Registrar of Lobbyist is available at the following website: http://www.orl-bdl.gc.ca.
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Conflict of Interest Disclosure Where an applicant employs or has a major shareholder who is either a current or former (in the last twelve months) public office holder or public servant in the federal government, compliance with the Code(s) (i.e. Code of Values and Ethics) must be demonstrated. Please provide information for anyone involved with this project who has in the past year been employed with or held public office with, the federal or provincial governments. Payment of Retroactive Costs Any costs incurred by the applicant before the effective date of a contribution agreement are not eligible for reimbursement by AAFC. The only possible exception to the aforementioned will be federal environmental assessment costs incurred within twelve (12) months preceding the date that a contribution agreement is signed with AAFC, but incurred no earlier than April 1, 2007 (the date the ecoABC Terms and Conditions came into force), up to an amount equal to ten percent (10%) of eligible project costs. All costs incurred by the applicant prior to the signing of a contribution agreement are at the sole risk of the applicant. For this reason, costs associated with the federal Environmental Assessment of the project are requested to be broken out as a separate category in Table 2 of Annex A.
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B-How to Prepare your ecoABC Proposal
This document is intended to act as a guide representing the minimum requirements for evaluation. Please provide at least the information requested in the following sections and feel free to submit additional supporting materials. You may wish to use the Mandatory Document Checklist (Annex A) provided at the end of this section to ensure all the required documents are provided. Should you have any questions with regard to this Guide, please contact ecoABC for clarification. SECTION 1 APPLICANT & PROJECT INFORMATION Please include at least the following information in this section of your proposal: a) Legal name of the applicant that will own and operate the facility b) Operating name of the applicant organization if different from the legal name c) Form of business entity (ie: corporation, cooperative, partnership, etc.) d) Jurisdiction of incorporation or registration e) Copies of Articles of Incorporation or, where appropriate, inter-company agreements governing a joint venture or consortium f) Applicant Contact information: Mailing address, phone and facsimile numbers, web page g) Contact information for information regarding the proposal a. Primary Contact - Name, title, address, phone, facsimile, e-mail b. Secondary Contact - Name, title, address, phone, facsimile, e-mail h) Name of the biofuel project i) g) h) i) j) Name of the biofuel facility to be constructed or expanded The address of the site location of the biofuel facility Mailing address of the biofuel facility if different from the site address Provide the actual or estimated commencement date for the construction Provide the estimated commissioning date for the biofuel facility
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SECTION 2 BUSINESS OVERVIEW a) An Executive Summary (Max 1-2 Pages) This narrative section should provide overview of the following: • • • Applicant (including information such as the name of the business entity and a brief statement of the its business history) Project (including details such as the nameplate capacity of the plant or expansion) Market Analysis & Repayment
b) Business Plan Please attach a copy of the project business plan including market analysis. c) Technical Description of the Project To satisfy the terms and conditions of the ecoABC program, the applicant is required to provide detailed technical documents and reports to be reviewed by ecoABC. This section of the guide is meant to assist the applicant in completing the technical component of the ecoABC funding proposal and to ensure all necessary documentation is provided. The applicant will provide the following documents and information to be reviewed: 1. Canadian engineer’s letter certifying nameplate capacity As part of its due diligence, ecoABC requires that a professional engineer, who is registered in Canada, certify that: 1. The project will make a renewable transportation grade biofuel (ethanol or biodiesel) from an agricultural feedstock. 2. Confirms the design nameplate capacity of the plant (and in the case of ethanol the % denaturant); and 3. Confirms they have reviewed and approved the detailed construction schedule. The letter should be on the engineer’s company letter head, be dated, clearly state the basis on which the statement is being made, be signed and indicate the engineer’s permit number. For the basis of the engineer’s letter to be acceptable to ecoABC, the engineer must review or have detailed knowledge of the project. If the letter is based on a review the engineer should state what documents and plans where reviewed.
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2. Description of the production process The applicant needs to provide a detailed technical description of the process. Typically the process descriptions included in business plans (or on websites) are not sufficiently detailed to perform due diligence assessments. The key unit operations need to be described and should include mass and energy balance information for all products and co-products. The applicant should highlight the design advantages and comparison to industry average on key drivers such as water use, energy use, process yields, and environmental performance. Use of best available technologies, new technologies or innovative integration of systems from other industries should also be mentioned. The intent is to highlight the project’s technical strengths to the reviewer. If possible a detailed process flow sheet and Process and Instrumentation Diagrams (P&IDs) for key unit operations should also be included in the document package. The intent is not to require the applicant to write this description from scratch. The applicant can use existing information such as; training material for operators, design briefs provided by technology providers, process control descriptions, etc. The technical reviewer needs to see enough details to judge if the engineering details are at a level consistent with a project that is “ready to build”. 3. Detailed construction Schedule (Gantt chart) Projects should have a very detailed construction schedule set out in a Gantt chart (or equivalent format). The content and level of detail should be consistent with industry standards for project management and large industrial facility construction. Key milestones of particular interest to ecoABC are: a) b) c) d) e) dates of submission/receipt of key permits (EA, building permits, etc) Start and end of site preparation Start and end of construction activities Start and end of commissioning project completion date
This document needs to be reviewed and certified by a registered engineer in Canada by either signing the Gantt chart itself or clearly stating in the engineers letter that the project schedule provided (name, date and revision) was reviewed and found to be reasonable. It is preferred if the engineer is a neutral third party, however applicant or technology provider engineers may also certify the accuracy of the document.
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EcoABC will use the document to assess “readiness to build” and risk associated with the project not meeting minimum ecoABC funding requirements of significant construction undertaken within 120 days of signing the contribution agreement and project completion within 30 month. 4. Property rights confirmation The applicant needs to provide evidence that they have secured the property rights to the required land to construct and operate the facility. This may include ownership, lease or easement agreements. The applicant needs to provide copies of documents demonstrating these property rights exist and that the location is adequate for the intended purpose. Acceptable documents may include deeds, signed lease agreements or other similar legal documents. If available a survey or layout of the proposed site should also be included with the application. 5. Permits The applicant must provide evidence that they have or will receive all required permits required to start construction and demonstrate significant construction within 120 days. All jurisdictions have slightly different permitting requirements and names for the permits but in general the applicant must provide: o Municipal building/construction permit o Environmental permitting approvals o Provincial o Federal o Air emission permits o Water discharge permits o Water use permits o Operating permit (municipal/Provincial) The applicant must provide a detailed list of the permits required for the project as well as Copies of letters granting the permits/authorization should be provided. If permits/authorizations or letter of intent to approve have not been received, the applicant must provide a copy of the permit application and an estimate of when approval is expected. If the applicant is unsure of the permitting requirements for the project it is best to contract a reputable project management company to provide support in the permitting process. Although permits will not usually stop a project, ecoABC must ensure that it will not cause delays beyond the 120 day significant construction requirement and disqualify the project from receiving funding. It is very likely that the applicant will not have received federal Environmental Assessment approval at the time the funding application is submitted, ecoABC will be working closely with AAFC EA staff to confirm that the Federal EA process is well under way
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at the time of submitting the Funding Proposal. 6. Proof of ownership of IP and licenses Biofuel production technologies and pathways are protected and covered by many patents. The applicant must provide documentation clearly indicating they have ownership of the appropriate IP or have been granted a license from the technology provider or IP owner. As most projects will be purchasing a design for the core conversion technology from an established technology provider, in most cases the contract will take the form of a license agreement. Providing a copy of the purchase agreement will satisfy this requirement. If no agreement has been officially signed the applicant should request a letter signed by an officer of the technology provider clearly stating that they own all relevant IP (or are licensed to use and transfer that IP) and will grant a license to the applicant as part of the terms and conditions of the purchase contract. For those applicants who are not using a 3rd party technology and are the owner developer of the design/conversion technology, they should clearly state the status of their IP and indicate that they are not infringing on any other biofuels developer’s rights. 7. Certified copy of the binding construction contracts The applicant must provide a copy of a binding contract or contracts that cover the construction of the biofuel production facility. These documents could take several forms and in general would include the following 3 elements: Engineering and design services, Technology provider agreements and a general contractor agreement. 8. Supplemental Information requested: a) Detailed Process flow diagrams or Process and Instrumentation Diagrams (P&IDs) outlining the project design and conversion process. Providing process diagrams or P&IDs is the best way to allow ecoABC technical reviewers an assign high degree of confidence in the applicants technology and ability to deliver renewable transportation biofuels. For projects not using a 3rd party technology provider with a solid track record, providing these documents is likely the only way to insure a positive technical review of the project. As without detailed drawing it will be difficult for the technical reviewer to determine if the applicant has the ability to make the stated fuel.
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b) Profile of technology provider with description of IP and licensing rights For those projects using a 3rd party technology platform, provide a detailed profile of the company and a list of successful project they have delivered is the easiest way to support the applicant’s performance claims. c) Land survey/ plant layout drawing In order to facilitate the technical reviewer’s ability to access the adequacy of land purchased or leased to build the plant, it is requested that a copy of the land survey, or preferably the proposed facility layout used in building permit applications be provided. d) Copies of quotes for key process equipment The applicant should provide copies of valid quotes for all a major pieces of equipment. e) Copies of major raw material contracts The applicant should provide copies of contracts for major raw material such as feedstock, industrial chemicals, natural gas etc. d) Project and Applicant Financial Information For this section of your proposal, please refer to Annex E - ecoABC Project Costing Principles. Information must be provided in Canadian dollars. 1. Provide a detailed project budget identifying all project costs. Please complete Table 2 in Annex C and include supporting documentation for the eligible and ineligible project costs. This will often be the same documentation required for the Technical Description of the Project. 2. Using Table 10 in Annex C please provide a list of the project’s eligible agricultural producer investors and include the information requested in order to validate that they meet the definition of Agricultural Producers as defined in Annex F – Glossary of ecoABC Terms and as described in the General Information section. Please also indicate the amount of equity investment by agricultural producers currently confirmed and the amounts remaining to be raised. An Excel spreadsheet template has been provided and must be used to facilitate presentation of this information. a. The applicant is also required to have each agricultural producer investor it wants recognized by ecoABC to complete and sign the appropriate from attached in Annex D. b. ecoABC requires a minimum of five percent (5%) new agricultural producer
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equity investment in the project as a proportion of forecasted eligible project costs. Please confirm the percent of agricultural producer investment obtained in proportion to the eligible project costs. 3. Complete Table 11 Annex C identifying all amounts, sources and types of project funding covering both eligible and ineligible project costs that are confirmed or requested, or expected to be requested from the various levels of government (federal, provincial, territorial and municipal), as well as private sector lenders and investors. The maximum amount of government funding allowed under ecoABC is 50% of eligible projects costs. As example, for a $50M dollar biofuel project where $30 million is deemed eligible for assistance under ecoABC, the project would be allowed a maximum of $15 million of government funding, including ecoABC. Where total government assistance exceeds 50% of the eligible ecoABC project costs, AAFC would reduce the ecoABC contribution accordingly. a. Please clearly identify those sources of government funding that are supporting costs that are also eligible for funding under ecoABC. b. Also include any research and development tax credits, repayable loans and loan guarantees and any special conditions attached to this funding. c. Include documentation on the expected timeline for satisfying the funding conditions, and letters of commitment / agreements from all financial partners demonstrating financial capacity to carry out the project. 4. Identify any amount owing to the federal government under legislation or contribution agreements. Provide details on any outstanding debts that your organization may have with the Government of Canada. 5. If the applicant or any other related companies (which are controlled by the applicant or the entity that controls the applicant) has been involved in other projects that have received funding from the federal government: a. list the assistance received including the applicable Program, project title, authorized (maximum) assistance, type of assistance (i.e. non-repayable, unconditionally repayable or conditionally repayable); b. confirm that your organization is current on all of its obligations (financial, reporting or otherwise) pursuant to those Agreements. 6. If applicable, provide the previous 3 years’ historical financial statements along with the most recent interim financial statements of the proponent (audited if available). Include a description of the applicant’s financial profile including key financial
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indicators and a brief assessment of recent financial trends. If the applicant was formed by a consortium or partnership include the previous 3 years’ financial statements of each party including their respective financial profiles. 7. The parent organization’s financial statements for the last 3 year years (if applicable). For diversified companies, also include the 3 year historical financial statements of the division or branch directing the project. 8. Provide pro-forma financial statements for the construction and commissioning phases of the project plus the 10 year repayment phase (ie: Income Statement; Cashflow Statement; Balance Sheet). The statements should be provided in soft and hard copy in spreadsheet format with supporting worksheets/pages/tables containing the assumptions and calculations which feed the final statements. The pro-forma statements should be in the same format, if possible, as historical statements to allow for comparison. Please segment any government tax credits or other government assistance including the calculations, name of the assistance program, and the applicant’s status. Please indicate all government and external funding separately, identifying all sources and timing as per the information being provided in Table 11 of Annex C. 9. Complete the Forecasted Repayment Schedule – Table 13 in Annex C using the information provided in the General Information section (Repayment of ecoABC Contribution) of the guide. 10. Transfer Pricing Information – acknowledge whether the applicant will purchase or sell products, equipment or services as a result of the project to a related entity. If yes, please provide a copy of the organization’s Transfer Pricing policy. 11. The proposal should include a description of the accounting system used by the Applicant and should explain how the applicant will track project costs during the construction and work phase, and how it will track sales and cost of goods sold in the repayment phase of the project. Sufficient detail will be required to confirm that the Applicant has sufficient capacity to accurately track and record costs associated with the performance of the proposed project. 12. The proposal should include a description of how the proponent applicant will track and keep up to date information on eligible farmer investors and their equity investments in the project.
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Declaration The Applicant acknowledges that he/she/it has read and understood the objectives, principles and criteria of the ecoAgriculture Biofuels Capital (ecoABC) initiative (see documentation at http://agr.gc.ca/ecoabc) and understands and agrees to the following: 1. The information provided in this ecoABC Funding Proposal is being collected for the purpose of assessing and reviewing the eligibility of the Applicant and the project proposed therein for funding under the ecoABC initiative and for purposes of audit, analysis, and evaluation of the ecoABC initiative. The Applicant acknowledges that the submission of the ecoABC Funding Proposal creates no obligation on the part of AAFC to provide funding for the project proposed therein, or any other funding. 2. The Applicant authorizes AAFC to publish on its public web site the classes of information identified in the program guidelines. The Applicant authorizes AAFC to share information from the Applicant’s ecoABC Funding Proposal and any additional information that the Applicant provides or that AAFC may later obtain through other means relative to this proposal with other federal government departments or agencies, or other levels of government such as provincial, territorial or municipal, or third party experts who may be assisting in the assessment of proposals. 4. The Applicant consents to third parties and other government programs to disclose to the ecoABC program administration, upon its request, any information pertaining to the Applicant or his/her/its financial affairs which the ecoABC program administration considers necessary for the purpose of verifying eligibility for the ecoABC program, the potential contributions payable under the ecoABC program, or the information provided on this form. 5. Any information provided in this application will be treated in accordance with the Access to Information Act and the Privacy Act. The Applicant confirms that he/she/it is in full compliance with all of his/her/its current obligations, financial and otherwise, with the Government of Canada.
3.
6.
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7.
The Applicant is under no legal obligation or prohibition, nor is the applicant subject to or threatened by any legal action, suit or proceeding which could or would prevent the Applicant from entering into a contribution agreement with AAFC.
8.
The Applicant is in compliance with all municipal, provincial and federal environmental requirements. The Applicant confirms that any person who is required to be registered pursuant to the Lobbyists Registration Act R.S. 1985 c. 44 (4th Supplement), including consultant and in house lobbyists, is registered pursuant to that Act.
9.
10.
The Applicant acknowledges that, if its proposal is accepted, it will be required to sign a contribution agreement that will contain terms and conditions under which funding shall be provided. All costs incurred by the Applicant prior to the signing of a contribution agreement are at the sole risk of the Applicant. The Applicant acknowledges it is the Applicant’s responsibility to obtain and provide the appropriate information from individual investors to validate their qualification as agricultural producers for the purposes of the ecoABC program. Further, it is the Applicant’s responsibility to clearly establish a link identifying the investment of each agricultural producer to the payment of eligible costs.
11.
12.
The Applicant acknowledges that all work with respect to the project will be performed in accordance with all regulatory bodies that have jurisdiction over the Applicant on this project.
13.
In the event that the Applicant is an entity other than an individual, the signatory below hereby represents and declares he/she is duly authorized to act on the Applicant’s behalf and to sign the Declaration and bind the Potential Applicant in its regard.
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14.
The Applicant confirms that, to the best of his/her/its knowledge, understanding, and belief, all information provided in this proposal is true and correct and the proposal fully complies with the ecoABC program eligibility conditions. The Applicant further understands that the ecoABC program is a discretionary, nonentitlement program and is subject to, amongst other things, the existence of available funding.
______________________________ Signature (Authorized Officer)
_____________________________ Title
______________________________ Print Name
_____________________________ Date
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ANNEX A – MANDATORY DOCUMENTS CHECKLIST
Completed Funding Proposal Guide/Template including Tables 1-13 Business plan Canadian engineer’s letter certifying nameplate capacity o Signed by qualified engineer o Membership number provided Description of the production process Detailed construction Schedule (Gantt chart) o Signed by qualified engineer o Membership number provided Property rights confirmation Permits o Municipal building/construction permit o Environmental permitting approvals o Environmental permitting application to AAFC Proof of ownership of IP and licenses Certified copy of the binding construction contracts Supplemental Information requested o Detailed Process flow diagrams or Process and Instrumentation Diagrams outlining the project design and conversion process o Profile of technology provider with description of IP and licensing rights o Copy of land survey or site layout o Copies of quotes for key process equipment o Copies of major raw material contracts Signed Declaration Agricultural Producer Investor Permission & Declaration Letters
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ANNEX B - SAMPLE PROJECT GANTT CHART
ANNEX C – PROJECT INFORMATION AND COST TABLES Tables 1 - 13 Inclusive
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TABLE 1 - Key Project Activities and Milestones
Applicant name:____________________________ Project Number:_____________________________ Key Project Activity and Milestone Description 1 2 Environmental Assessment (CEAA) Milestones EA Report completed Significant Construction* Milestones [insert at least one milestone here] Estimated Date of Completion (Milestone)
dd/mm/yyyy dd/mm/yyyy dd/mm/yyyy dd/mm/yyyy dd/mm/yyyy dd/mm/yyyy dd/mm/yyyy
Estimated Start Date
dd/mm/yyyy
3
Construction of Buildings Milestones
dd/mm/yyyy
dd/mm/yyyy dd/mm/yyyy dd/mm/yyyy dd/mm/yyyy
[insert at least one milestone here]
4
Equipment & Systems Milestones
dd/mm/yyyy
dd/mm/yyyy dd/mm/yyyy dd/mm/yyyy dd/mm/yyyy
[insert at least one milestone here]
5
Commissioning Milestones
dd/mm/yyyy
dd/mm/yyyy dd/mm/yyyy dd/mm/yyyy
[insert at least one milestone here] Commissioning completed Completion of ecoABC Final Report
dd/mm/yyyy dd/mm/yyyy
*See definition of Significant Construction in Annex F – Glossary of Terms
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TABLE 2– Estimated Cost Breakdown for the Project Period*
Applicant name:____________________________ Project Number:_____________________________
BREAKDOWN OF ESTIMATED ELIGIBLE COSTS
Description of costs Direct Salary & Labour Environmental Assessment Site Work/Preparation Construction of Buildings Equipment & Systems Commissioning Other Direct Costs
Subtotal
TOTAL
BREAKDOWN OF ESTIMATED INELIGIBLE COSTS
Description of costs Land Administrative Buildings Interest, Insurance Financing and Legal Fees Other (please specify) Subtotal Total Project Costs
TOTAL
* defined as estimated date of signature of Contribution Agreement until the submission of the Final Report
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TABLE 3 – Estimated Cost Breakdown – Direct Salary & Labour
Applicant name:_______________________________ Project number:_______________________________ Description of Eligible Position # of positions Estimated Annual Salary Total for Project Period
Total Direct Salary & Labour Cost (should equal total in Table 2)
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TABLE 4 – Estimated Cost Breakdown - CEAA Environmental Assessment
Applicant Name:_______________________________ Project Number:_______________________________ Eligible EA Cost Description Estimated Date Cost incurred (Month / Year) Estimated Cost
Total Environmental Assessment Cost (should equal total in Table 2) Note: Costs associated to the Environmental Assessment of the project are broken out separately because these are the only costs incurred prior to the signing of a Contribution Agreement, but no earlier than April 1, 2007, that are eligible for consideration under ecoABC, subject to a limit of 10% of all Eligible Project Costs claimed.
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TABLE 5 – Estimated Cost Breakdown - Site Work/Preparation
Applicant Name:_______________________________ Project Number:_______________________________ Eligible Cost Description Estimated Cost
Total Site Work/Preparation Cost (should equal total in Table 2)
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TABLE 6 – Estimated Cost Breakdown - Construction of Buildings
Applicant Name: _______________________________ Project Number: _______________________________ Eligible Cost Description Estimated Cost
Total Construction Cost (should equal total in Table 2)
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TABLE 7 – Estimated Cost Breakdown - Equipment & Systems
APPLICANT NAME:_______________________________ PROJECT NUMBER:_______________________________
Eligible Equipment & Systems Description
Estimated Cost
Total Equipment & Systems Cost (should equal total in Table 2)
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TABLE 8 – Estimated Cost Breakdown – Commissioning
Applicant Name: _______________________________ Project Number: _______________________________ Eligible Cost Description Estimated Costs
Total Cost of Commissioning (should equal total in Table 2)
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TABLE 9 – Estimated Cost Breakdown - Other Direct Costs
Applicant Name:_______________________________ Project Number:_______________________________ Eligible Other Cost Description Estimated Cost
Total of Other Direct Costs (should equal total in Table 2)
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TABLE 10 – Listing of Eligible Agricultural Producer Investors
Applicant Name:_______________________________
Project Number:_______________________________
Eligible new equity investment ($) Home OR Business Mailing Address individual or corporation investment ($) $1 million per Total new equity ie. Maximum of Date of investment (mm/dd/yyyy) Has Investor Signed the Declaration? Yes / No
Agricultural Producer
If individual is a 20%
SIN
Investors Full name
owner of a Farm
Home OR
Or
(individuals OR
Corporation, specify
Business
CRA Business
companies)
name of Corporation
Phone Number
Number
1
2
3
4
5
6
7
8
9
Please insert this table in electronic format using MS Excel.
TABLE 11 – Total Project Funding Sources
Applicant Name:_______________________________ Project Number:_______________________________ Confirmation Status Amount (Approved/Received/ Pending)
Funding source (include Total Agricultural Producer Investment)
Total Project Funding Sources (should be equal to Total Project Costs in Table 2)
TABLE 12 – Expected Buyer of Biofuel and Co-product Information
Applicant Name:____________________________ Project Number:_____________________________ Type of Biofuel Expected Buyers Estimated Annual Purchase amount (in litres) Contract in place (Y/N)
Name of Expected Buyer
1
2
3
4 Type of Co-product Expected Buyers Estimated Annual Purchase amount (in volume)
5
Name of Expected Buyer
1
2
3
4
5
*Include only volumes as a result of the project, if space provided is insufficient please attached additional tables as required
TABLE 13 – Forecasted Repayment Schedule
Forecasted repayments for this project are as follows: Date (dd/mm/yyyy)
(insert Commissioning Date) (One year after commissioning) (Two years after commissioning) (Three years after commissioning) Jan 1st to Dec 31st (4 calendar year after commissioning) January 30, 20xx* (*5 year after commissioning) January 30, 20xx* (*6th year after commissioning) January 30, 20xx* (*7 year after commissioning) January 30, 20xx* (*8 year after commissioning) January 30, 20xx* (*9 year after commissioning) January 30, 20xx* (*10th year after commissioning) January 30, 20xx* (*11th year after commissioning) Total Repayment $ Seventh Repayment (if necessary) $ Sixth Repayment (if necessary) $
th th th th th
Event
Commissioning of Plant 1 anniversary of commissioning 2nd anniversary of commissioning 3rd anniversary of commissioning
st
Repayment in CAD
n/a Grace Period
Grace Period
Grace Period
Calculation Year for First Repayment
n/a
First Repayment
$
Second Repayment (if necessary)
$
Third Repayment (if necessary)
$
Fourth Repayment (if necessary)
$
Fifth Repayment (if necessary)
$
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ANNEX D - Agricultural Producer Investor Permission & Declaration Letters
Annex D contains letters of certification that are required for the verification of agricultural producer investment eligibility. The applicant must obtain electronic copies of these letters, modify the text highlighted in yellow and have their agricultural producer investors sign the appropriate letter. There are letters for four different situations: 1. ANNEX D-1: contains a letter that must be completed by individuals who have reported farming income and are investing new equity in the proposed biofuels plant. 2. ANNEX D-2: contains a letter that must be completed by corporations that have reported farming income and are investing new equity in the proposed biofuels plant. 3. ANNEX D-3: contains a letter that must be completed by Status Indians who are agricultural producers but do not file income taxes, and are investing new equity in the proposed biofuels plant. 4. ANNEX D-4: contains two letters that must be used when an individual, who owns more than 20% of a Corporation that has declared farming revenue, wishes to become an investor: Annex D-4(a): A letter that must be completed by the individual agricultural producer who is investing new equity in the proposed biofuels plant. Annex D-4(b): A letter that must be completed by the corporation that has reported farming income. Originals of these letters must be forwarded to ecoABC along with your ecoABC Funding Proposal. If a special situation requires a different letter, please provide suggested wording to your ecoABC officer for review and approval before sending it out to the Agricultural Producers for signature.
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ANNEX D-1 Insert Applicant name here Insert Applicant address here (hereinafter referred to as the “Applicant”) Address line 2 Address line 3 Re: Confirmation of agricultural producer status (Annex C-1). I hereby certify that the last year in which I reported farming income was _________ (year) I further certify that I have contributed new equity in the amount of $ ___________________ in Canadian funds to the Applicant for the purpose of building the Applicant to insert biofuel plant name biofuel plant in Canada. (use the following sentence only if applicable) My investment is contingent on the Applicant signing a contribution agreement with the ecoAgriculture Biofuels Capital (ecoABC) initiative. In order to verify eligibility for the ecoABC initiative, I hereby consent to the release, by the Canada Revenue Agency to an official of the Department of Agriculture and AgriFood Canada, of information from my income tax returns. I understand that this information will be used solely for the purpose of determining and verifying my eligibility and the general administration and enforcement of the ecoABC initiative and will not be disclosed to any other person or organization without my written approval. This authorization is valid for the five taxation years prior to the date of signature.
________________________________________ Printed Name of the Agricultural Producer (as on record with Canada Revenue Agency)
________________________________________ Signature of Agricultural Producer
_________________ Date
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________________________________________ Social Insurance Number
Agriculture Producer Address: ____________________________ ____________________________ ____________________________ ____________________________
Agricultural Producer Contact Phone Number: ____________________________
Agricultural Producer Email address: ____________________________
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ANNEX D-2 Insert Applicant name here Insert Applicant address here (hereinafter referred to as the “Applicant”) Address line 2 Address line 3 Re: Confirmation of agricultural producer status (Annex D-2). I, as an authorized representative of _____________________________ (corporation name, hereinafter referred to as the “Corporation”), hereby certify that the last fiscal year in which the Corporation reported farming income ended on ______________ (fiscal year end in DD/MM/YY format). I further certify that the Corporation has contributed new equity in the amount of $___________________ in Canadian funds to the Applicant for the purpose of building the Applicant to insert biofuel plant name biofuel plant in Canada. (use the following sentence only if applicable) This investment is contingent on the Applicant signing a contribution agreement with the ecoAgriculture Biofuels Capital (ecoABC) initiative. In order to verify eligibility for the ecoABC initiative, I hereby consent to the release, by the Canada Revenue Agency to an official of the Department of Agriculture and AgriFood Canada, of information from the Corporation’s corporate income tax returns. I understand that this information will be used solely for the purpose of determining and verifying the Corporation’s eligibility and the general administration and enforcement of the ecoABC initiative and will not be disclosed to any other person or organization without written approval from an authorized representative of the Corporation. This authorization is valid for the five taxation years prior to the date of signature.
________________________________________________________________________ Printed Name and title of authorized representative
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________________________________________ Signature of authorized representative
_________________ Date
________________________________________ Canada Revenue Agency Business Number for the Corporation
Corporation Address: ____________________________ ____________________________ ____________________________ ____________________________
Authorized Representative’s Phone Number: ____________________________
Authorized Representative’s Email address: ____________________________
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ANNEX D-3 Insert Applicant name here Insert Applicant address here (hereinafter referred to as the “Applicant”) Address line 2 Address line 3 Re: Confirmation of agricultural producer status. I hereby certify that, pursuant to the Indian Act, I am registered or entitled to be registered as an Indian and that I carry on the business of farming on a reserve in Canada. I have attached evidence of my Status Indian registration or eligibility. Also attached is evidence that I am an agricultural producer (for example: proof of right to use agricultural lands). I further certify that I have contributed new equity in the amount of $ _______________ in Canadian funds to the Applicant for the purpose of building the Applicant to insert biofuel plant name biofuel plant in Canada. (use the following sentence only if applicable) My investment is contingent on the Applicant signing a contribution agreement with the ecoAgriculture Biofuels Capital (ecoABC) initiative. I understand that ecoABC officers may request further proof / information in order to determine my eligibility as an investor under the ecoABC terms and conditions.
________________________________________ Printed Name of the Agricultural Producer
________________________________________ Signature of Agricultural Producer
_________________ Date
43
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Agricultural Producer Address: ____________________________ ____________________________ ____________________________ ____________________________
Agricultural Producer Contact Phone Number: ____________________________
Agricultural Producer Email address: ____________________________
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ANNEX D-4(a) Insert Applicant name here Insert Applicant address here (hereinafter referred to as the “Applicant”) Address line 2 Address line 3 Re: Confirmation of agricultural producer status (Annex D-4(a)). I hereby certify that I own 20% or more of _____________________________ (corporation name, hereinafter referred to as the “Corporation”). I further certify that I have contributed new equity in the amount of $ ___________________ in Canadian funds to the Applicant for the purpose of building the Applicant to insert biofuel plant name here biofuel plant in Canada. (use the following sentence only if applicable) My investment is contingent on the Applicant signing a contribution agreement with the ecoABC initiative. I understand that the ecoABC initiative will verify the nature of the Corporation’s declared revenues with the Canada Revenue Agency. I also understand that the ecoABC initiative will verify my level of investment with the Corporation.
________________________________________ Printed Name of the Agricultural Producer
________________________________________ Signature of Agricultural Producer
_________________ Date
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Agriculture Producer Address: ____________________________ ____________________________ ____________________________ ____________________________
Agricultural Producer Contact Phone Number: ____________________________
Agricultural Producer Email address: ____________________________
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ANNEX D-4(b) Insert Applicant name here Insert Applicant address here (hereinafter referred to as the “Applicant”) Address line 2 Address line 3 Re: Confirmation of agricultural producer status (Annex D-4(b)). I, as an authorized representative of _____________________________ (corporation name, hereinafter referred to as the “Corporation”), hereby certify that the last fiscal year in which the Corporation reported farming income ended on ______________ (fiscal year end in DD/MM/YY format). I further certify that _________________________ (agricultural producer) owns 20% or more of the Corporation. In order to verify eligibility for the ecoAgriculture Biofuels Capital (ecoABC) initiative, I hereby consent to the release, by the Canada Revenue Agency to an official of the Department of Agriculture and Agri-Food Canada, of information from the Corporation’s corporate income tax returns. I understand that this information will be used solely for the purpose of determining and verifying the Corporation’s eligibility and the general administration and enforcement of the ecoABC initiative and will not be disclosed to any other person or organization without written approval from an authorized representative of the Corporation. This authorization is valid for the five taxation years prior to the date of signature.
_________________________________________________________________ Printed Name and title of authorized representative
________________________________________ Signature of authorized representative
_________________ Date
47
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________________________________________ Canada Revenue Agency Business Number for the Corporation Corporation Address: ____________________________ ____________________________ ____________________________ ____________________________
Authorized Representative’s Phone Number: ____________________________
Authorized Representative’s Email address: ____________________________
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ANNEX E - ecoABC Project Costing Principles
GENERAL PRINCIPLE The total eligible costs of a project shall be the sum of the applicable direct costs which are, or are to be reasonably and properly incurred and/or allocated, in the performance of the Project, less any applicable credits. These costs shall be determined in accordance with the Applicant’s cost accounting system as accepted by the Minister and applied consistently over time. DEFINITION OF REASONABLE COST 1) A cost is reasonable if, in nature and amount, it does not exceed that which would be incurred by an ordinary prudent person in the conduct of a competitive business. 2) In determining the reasonableness of a particular cost, consideration shall be given to: a. whether the cost is of a type generally recognized as normal and necessary for the conduct of the performance of the Project; b. the restraints and requirements by such factors as generally accepted sound business practices, arm's length bargaining, federal, provincial and local laws and regulations, and Agreement terms; c. the action that prudent business persons would take in the circumstances, considering their responsibilities to the owners of the business, their employees, customers, the Government and public at large; d. significant deviations from the established practices of the Applicant which may unjustifiably increase the eligible costs; and e. the specifications, delivery schedule and quality requirements of the particular Project as they affect costs. DIRECT COSTS There are seven categories of direct costs: 1) Direct Salary & Labour: meaning that portion of gross wages or salaries incurred for work which can be specifically identified and measured as having been performed or to be performed on the funded project and which is so identified and measured consistently by the company's cost accounting practices as accepted by AAFC.
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2) Environmental Assessment: meaning the cost of all work which can be specifically identified and measured as having been performed in relation to the federal Environmental Assessment (EA) of the project. Please note: It is important that any costs related to the EA, even those that may otherwise be attributable to other categories, such as Site Work/Preparation, be included here as these are the only eligible project costs that can be incurred by the recipient prior to the signing of a Contribution Agreement. The environmental assessment-related costs claimed may not exceed ten percent (10%) of the total Eligible Project Costs claimed and will not be covered by AAFC unless an ecoABC Contribution Agreement is signed. 3) Site Work/Preparation: The cost of field development and installation of utilities required to prepare the plant site for construction. 4) Construction: The cost of plant construction (excluding equipment) and any postconstruction site work required for industry operations. 5) Equipment & Systems: meaning the cost of all equipment used for work which can be specifically identified and measured as having been performed or to be performed on the project. 6) Commissioning: meaning any costs associated specifically to the commissioning process of the plant including the costs associated with the preparation of the final project report. 7) Other Direct Costs: meaning any costs for work which can be specifically identified and measured as having been performed or to be performed on the project, which have not been captured in the preceding cost breakdowns. CREDITS The applicable portion of any income, rebate, allowance, or any other credit relating to any applicable direct costs received by or accruing to the Applicant, shall be credited to the Eligible Costs. ELIGIBLE COSTS
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In order to be considered eligible project costs, the costs must be acceptable to the Minister of Agriculture and Agri-Food, and must be directly attributable to the project for development of new renewable fuels production capacity. These include: • contract costs and fees for design, engineering, procurement and construction services including intellectual property licenses; • costs associated with environmental assessments for the Project (subject to a limit • • • of 10% of all Eligible Project Costs claimed); costs for production systems and equipment, including monitoring and tracking systems; salary costs or fee components for design, engineering, procurement and construction; salary costs or fee components in contracts for implementing and commissioning the Project. Eligible project costs can only be incurred on or after the date of signing of the Contribution Agreement with the exception of costs incurred by the Eligible Recipient relevant to the development and provision of information necessary for AAFC to discharge its obligations under the Canadian Environmental Assessment Act (CEAA). These environmental assessment-related costs will be considered as eligible project costs up to twelve months prior to the signing of the Contribution Agreement, but in no case any earlier than April 1, 2007 (the date the ecoABC Terms and Conditions came into force). The environmental assessment-related costs claimed may not exceed ten percent of the total Eligible Project Costs claimed. While some applicants to the program may not eventually enter into a Contribution Agreement, AAFC will not provide compensation for these costs unless an ecoAgriculture Biofuels Capital initiative Contribution Agreement is signed. INELIGIBLE COSTS Notwithstanding that the following costs may be directly attributable to the Project and may have been or may be reasonably and properly incurred and paid by the successful applicant with respect to the Project, they are not considered eligible project costs: a. The applicable portion of any income, rebate, allowance, or any other credit relating to the Eligible Project Costs, received by or accruing to the Applicant.
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b. Research and development; c. Land purchase, rent or lease; d. e. f. g. h. i. j. k. Administrative buildings; Marketing and public relations costs and salaries; Costs related to Project operation aside from commissioning-related costs; Financing and legal fees; Insurance; Interest; Property taxes; Any income tax or surtax;
l. Costs related to the production of products other than renewable fuel and direct coproducts; m. n. o. p. Fines and penalties; Depreciation of assets; Amortization of unrealized appreciation of assets; Provisions for contingencies;
q. Losses on other projects, contracts, investments, bad debts and expenses for the collection thereof. r. any portion or any cost or assistance that, in the Minister’s opinion, exceeds the fair market value for that cost item or assistance; s. any cost, such as amortization that would not result in a direct, out-of-pocket expense for the Applicant; t. land, goodwill, and existing equipment or buildings owned by a related party; u. entertainment expenses; v. charitable donations Note that costs associated with planning, construction or commissioning of other facilities not directly relevant to the production of biofuels are not eligible. For example, the costs related to the construction of feedstock preparation facilities, e.g. canola crushing facilities, are not eligible under the ecoAgriculture Biofuels Capital initiative.
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ANNEX F – Glossary of ecoABC Terms
Agricultural Producer is defined as any person who has reported farming income or any person who owns at least 20% of the shares of a corporation that has reported farming income under the Income Tax Act in at least one of the last five years prior to the signing of an ecoABC Contribution Agreement. A person who is registered or entitled to be registered as an Indian pursuant to the Indian Act who carries on the business of farming on a reserve in Canada and who does not file income tax returns may also be defined as an agricultural producer for the purposes of this program. It will be incumbent on the applicant to obtain the appropriate information from individual investors to validate their qualification as agricultural producers for the purposes of this program. It is the Applicant’s responsibility to clearly establish a link identifying the investment of each agricultural producer. A maximum of $1 million equity investment per individual agricultural producer will recognized when calculating the agricultural producers investment in a project, although the actual individual agricultural producer investment may exceed this $1 million. Agricultural Producer Investment means the cash contribution made to the Project through the purchase of shares or other ownership interest in a form approved by the Minister by an Agricultural Producer subject to the following limits: 1) where the Agricultural Producer is an individual or corporation investing directly in the Recipient, up to one million dollars ($1,000,000) per individual or corporation may be counted; 2) where the Agricultural Producer is an individual or a corporation that owns at least 20% of the shares of a corporation that has reported farming income under the Income Tax Act in at least one of the last five years and is investing directly in the Recipient, up to one million dollars ($1,000,000) per individual or corporation may be counted, provided that the maximum amount that may be counted for any one corporation that has reported farm income and all of its shareholders shall not cumulatively exceed one million dollars ($1,000,000); 3) where the Agricultural Producer is an individual or corporation investing in a new cooperative or corporation formed for the purpose of investing in the Project and, provided the full amount of that investment can be shown to be the source of funds invested by that new cooperative or corporation in the Recipient for the
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purposes of the Project, up to one million dollars per individual or corporate investor; and 4) where the Agricultural Producer is an individual or corporation investing in a special class of shares issued by an existing cooperative or corporation for the purpose of investing in the Project and, provided the full amount of that investment can be shown to be the source of funds invested by that cooperative or corporation in the Recipient for the purposes of the Project, up to one million dollars per individual or corporate investor. Project Period is defined as the estimated date of signature of the ecoABC Repayable Contribution Agreement until the submission of the Final Report. Significant Construction means the substantial progress towards the completion of the Project work plan that must occur within 120 days of the signing of the ecoABC Repayable Contribution Agreement. The recipient must demonstrate this by providing the following and other related supporting documentation that may be requested: i) ii) iii) Executed financial agreements to provide for adequate financing of the project; Letter from a technology provider confirming the purchase order of the technology, total nameplate capacity ordered, and expected date of delivery; and Report from a professional engineer registered in Canada confirming the anticipated commissioning date of the Project and validating that the following substantial construction progress has occurred:
The exact content of the Engineer’s report will vary by project but as a guide 3 different types of project are listed with a variety of activities that demonstrate significant construction. A. Construction of a new facility on a Greenfield site. i. Land purchase has closed and company has taken possession of land ii. Civil work is well under way 1. Land cleared and graded for facility installation 2. Road access established 3. Main utilities connections in place or progress 4. Site perimeter established and secured iii. Construction infrastructure in place 1. Temporary building in place
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iv.
2. temporary utilities in place 3. washroom on-site 4. construction crew mobilization underway Building excavation and footing in place or in progress
B. Construction of a new facility on a Brownfield site i. Land purchase closed and company has taken possession of land ii. Civil work is well under way 1. Demolition complete 2. required site remediation completed or well underway 3. utilities upgraded or replaced iii. Construction infrastructure in place 1. Temporary building in place 2. temporary utilities in place 3. washroom on-site 4. construction crew mobilization underway iv. Building excavation and footings in place or in progress C. Expansion of a existing facility Civil work is well under way i. 1. Demolition complete 2. required site remediation completed or well underway 3. utilities upgraded or replaced ii. Construction infrastructure in place 1. Temporary building in place 2. temporary utilities in place 3. washroom on-site 4. construction crew mobilization underway iii. Building excavation and footings in place or significant progress Building erection in progress iv. Average Gross Income Per Litre means: for a new facility, the gross income generated by the project over the previous 36 months divided by the renewable transportation fuel volume produced for the same period. for an expanded facility, the Average Gross Income Per Litre is based on all production of the facility. However, when calculating the repayment amount for an expanded facility, the 'total biofuels produced' is defined as the increase in new capacity, and not the total production of biofuels. If, for example, a facility expanded from 10 million to 30 million litres of annual production capacity, the Average Gross Income Per Litre would be calculated on the 30 million litres,
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whereas for the purposes of repayment, the 20 million litres of increased capacity would be used as 'the total biofuels produced in the previous twelve (12) months'. Gross Income means Sales minus Cost of Goods Sold Sales means all consideration received by the recipient for the renewable transportation biofuels and co-products produced. Sales includes any amounts received under a producer incentive program that may be issued by any level of government. Cost of Goods Sold (COGS) means feedstock costs, natural gas and energy costs, direct labour, processing, operating and maintenance supplies and freight. COGS excludes marketing and administrative costs, non-operating costs and depreciation. For the purposes of the ecoABC calculation, COGS will include any repayment that may have been made or is required under the Ethanol Expansion Program and/or any producer incentive program.
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ANNEX G - Frequently Asked Questions
This section is meant to answer some of the most common questions involved with providing the technical information associated with the project. Q1. I’ve signed a non-disclosure agreement with my technology provider and cannot provide some of the information requested? A1. The mandatory information requested is not optional and is required for ecoABC to perform adequate due diligence on the proposal. The ecoABC program under federal government regulations has an obligation to protect the commercially sensitive information provided to them. Informing the technology provider of these protections is usually enough to get permission from the technology provider to allow you to provide copies of the requested information. Q2. We do not have some of the information requested in the application? A2. The information requested is deemed to be the essential elements of a successful and profitable biofuels project. In many cases not providing that information would indicate that the project is not ready to proceed and would result in the applicant not receiving funding. Q3. We feel some of the information requested does not apply to our project and feel it is putting an undue burden and expense on us to complete the application? A3. See A1 and A2. However if you feel strongly that an element does not apply, please contact ecoABC as not providing requested information may delay your approval or result in not receiving funding. Q4. We do not have an engineer qualified or licensed in Canada to certify the requested documents, can our American technology company provide the letter? A4. No, the requirement to have a Canadian registered engineer sign the letter is written directly into the programs terms and conditions and cannot be waived. It is a key element of the program due diligence and must be adhered to if the applicant
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wishes to apply for funding with ecoABC. Every province has multiple firms capable of providing that service at reasonable cost and in a timely manner. Should you have difficulty finding an engineer, please contact ecoABC and we may be able to assist in finding a qualified person Q5. We do not meet one (or several) of the program criteria, do we still qualify and can we still apply? A5. No, the program criteria are pass/fail. Should you not meet any of the criteria ecoABC will not be able to sign a contribution agreement and fund the project. Please apply when all conditions can be met. Q6. Do I need to use the ecoABC templates to submit the application? A6. In most cases No, however the application templates insure that you have provided all the required information and give guidance on what is needed to meet each criteria. Please consult with ecoABC if you have information in alternate format you would like to submit.
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