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Palm oil in Papua New Guinea

The Belgian partner in this project is a stock quoted holding company active in the agro-industrial fi eld, more particularly the development and management of plantations. The project to be fi nanced consisted of the rehabilitation and expansion of the existing activities of an oil palm plantation company (Hargy Oil Palms Ltd.) located in the Western New Britain Province of Papua New Guinea. The plantation forms a nucleus estate with a mill processing facility for the Fresh Fruit Bunches (FFB) of its own plantations as well as for the FFB grown and sold by over 3,500 smallholders who, together with their families, rely on the processing mills for their livelihood.

From 2000 until 2003 the company carried out an extensive investment scheme for the rehabilitation and expansion of the plantation areas (up to a total planted area of 8,066 ha) and processing facilities. The total investment over this period amounted to EUR 28 million of which EUR 12.5 million was fi nanced through long-term loans by 2 EDFI-members, the German DEG and BMI-SBI, who made use of the ECFI III Facility of the European Investment Bank (EIB) to refi nance part of this amount.

The main investments consisted of:

  • Replanting of oil palm trees on the existing plantations and new plantations;
  • Rehabilitation and modernization of the existing palm oil mill and increase of its capacity;
  • Building of a new palm oil mill needed to process the increased output of the company’s own plantations as well as the output of an increasing number of smallholders;
  • Investment in a new environmental treatment system for palm oil waste (effl uent/ empty fruit bunches) that is transformed into compost to be used as organic fertilizer on the plantations.

In addition to its profi tability, this project combines signifi cant effects in local development with care for the environment and as such perfectly fi ts into BMI-SBI’s business principle of corporate social responsibility.