UNIVERSITY OF

DAR-ES-SALAAM
BUSINESS SCHOOL
Finance Department | Instructor: Dr Tobias Swai | FN 619

BAGAMOYO GAS PROJECT

Master of Finance and Accounting in Oil and Gas

MFA-OG

GROUP 3
Elvis Massawe | Adela Mwakyoma | Eben Kinabo
2017-06-01709 | 2017-06-01944 | 2017-06-02058
 BAGAMOYO GAS PROJECT
TABLE OF CONTENTS
1. INTRODUCTION ...................................................................................................................... 3

The Bagamoyo District ............................................................................................................... 3

Bagamoyo Energy Consumption and Demand ........................................................................... 3

Main Economic Activities .......................................................................................................... 4

Tourism activities.................................................................................................................... 4

Agricultural activities.............................................................................................................. 4

Mari culture activities- ............................................................................................................ 4

Fisheries .................................................................................................................................. 4

Manufacturing activities ......................................................................................................... 4

Prospects ..................................................................................................................................... 5

Demand for Gas energy in Bagamoyo District ....................................................................... 5

Development of Bagamoyo Port ............................................................................................. 5

Bagamoyo SEZ project ........................................................................................................... 6

The Bagamoyo Gas Project (Introducing the Project) ................................................................ 7

2. MARKETING AND DISTRIBUTION ...................................................................................... 9

Energy status ........................................................................................................................... 9

Distribution and infrastructure .............................................................................................. 10

Construction .............................................................................................................................. 13

The Pipeline .......................................................................................................................... 13

Pipeline compressor station .................................................................................................. 13

Pricing ....................................................................................................................................... 14

For Household ....................................................................................................................... 14

For Industries ........................................................................................................................ 14

3. FINANCIAL MODEL .............................................................................................................. 15

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Necessary assumptions for expected growth & fluctuations. ................................................... 15

Annual income statement .......................................................................................................... 15

Annual financial position. ......................................................................................................... 16

Statement of cashflow ............................................................................................................... 18

4. RISKS ....................................................................................................................................... 22

Contractual risks ................................................................................................................... 22

Technological risks ............................................................................................................... 22

Supply risks ........................................................................................................................... 22

5. SOCIAL, ECONOMIC & ENVIRONMENTAL IMPACT ASSESMENT............................. 23

Employment opportunities .................................................................................................... 23

Soil degradation .................................................................................................................... 23

Loss of biodiversity............................................................................................................... 23

CONCLUSION ............................................................................................................................. 23

REFERENCE ................................................................................................................................ 25

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1. INTRODUCTION
The Bagamoyo District
Bagamoyo also referred to as “Bwaga–moyo” which means “Lay down your heart” is one of the
6 districts of the Pwani Region of Tanzania which has an area of 9,842 km2 (91.3% is a dry land
area and the rest is watered land). The district lies between 30.0. - 39.0. Latitude South and 6.0. -
7.0. Longitude East. Whereas the District Council is divided into 6 divisions. It has 22 Wards
and 97 Villages. with a population size of 311,740 people who comprise of 50.5 % females and
49.5 males (National Bureau of Standard, 2013). The town has undergone tremendous changes
since the time of slave trade when it was the last major exit port for slaves before they were
shipped to Zanzibar and the Arab countries.

Bagamoyo Energy Consumption and Demand

Bagamoyo as one of the towns in Tanzania which is blessed with a number of energy sources in
which most are undeveloped while few are dominant, like biomass
(wood-fuel and charcoal), hydro-electricity, natural gas, petroleum products ,coal ,solar and
wind. The primary energy supply includes biomass (wood-fuel and charcoal) at 23%, petroleum
products like kerosene and natural gas at 19%, hydro-electricity from Kunduchi supplied by
TANESCO is at 53.5%, and the remaining 4.5% is contributed by other renewable energy
sources used. Hence most of the energy is delivered from biomass and consumed in rural areas;
in which this huge dependence on biomass as the main energy source contributes to deforestation
and with the help of other sources like petroleum products the town experiences a bigger
environmental degradation cost (AFDB, 2012). And as for electricity consumption up to 2017
more than 49% of bagamoyo’s population has gained access to electricity although the
infrastructure to supply at 100% percent is possible, a big part of the community is still not
capable of affording the price. Extending rural areas is still not very marketable due to inability
of most of the rural society to afford electricity costs (“how-many-rural-tanzanians-have-power-
c60f4d89697e @ pesacheck.org,” n.d.).

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Main Economic Activities
The following are some of the economic activities of Bagamoyo, Tanzania.

Tourism activities. Tourism has been important due to the presence of several tourist attractions
which comprise of fine beaches along the Indian Ocean, coastal cultural tourism, slave trade
port, ancient Arab buildings, game reserves, national parks, marine parks, forest reserves, sports
fishing and deltas. Other occupation includes boat building, salt making, charcoal making,
mangrove pole cutting, seaweed farming,wage, labour, livestock keeping and traditional
medicine.

Agricultural activities– No major cash crop is cultivated in Bagamoyo. Agricultural activity is

largely subsistence and low value crops (i.e., small scale paddy farming). There is a new
proposal for a sugarcane bioenergy facility in Bagamoyo, The crops grown include, rice,
cassava, water melon, maize, coconuts, cashew nuts and vegetable.

Mari culture activities- (prawn farming) and sea weed farming has contributed to the ability of
some Bagamoyo communities to improve family incomes as a supplement to traditional income
sources. Seaweed farming is practiced large extent in the Mlingotini village and in order to
maintain and increase income generated from seaweed farming, some villages, with the aid of
TCMP-PWANI project engaged in seaweed related products like soap and skin oil making. The
sale of seaweed itself generates little income compared to product generated from seaweed hence
seaweed related product making is the main driving force for the activity. Prawn farming and
crab fattening is mainly practiced at Mbegani Fisheries Development Centre (Mutatina, 2008)

Fisheries – The marine fishery (of which 96 percent catch is from the artisanal fishery) is very
important in Bagamoyo district where majority of the population depends on the fishing activity
as their major sources of daily income and food for their families (Tobey et al.,2011). Most of
the marine artisanal fishers in Bagamoyo obtain their fish in shallow water habitats and nearby
reef areas in the vicinity of the coastline

Manufacturing activities, The manufacturing industries in bagamoyo are those producing food
products, beverages, tobacco, textile and leather goods, chemicals, rubber and plastics.

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Prospects
Demand for Gas energy in Bagamoyo District
The planning of Bagamoyo pipeline project has been inclined to the prospected growth of the
area which will demand sufficient energy supply to carter that growth. The project has been
vested on supplying gas both for heating to the households and as source of electricity to the
industries in Bagamoyo district. The current energy supply from TANESCO in Bagamoyo
district is not sufficient to meet the current need for energy because the pricing of electricity is of
no favor to the purchasing power to a significant amount of Bagamoyo’s residents since most of
them are of lower income, hence, introduction of cheaper energy source which is sufficient will
boost the living standard of the people in Bagamoyo district.

In Bagamoyo district there is a surging in the demand for cheaper source of energy (gas) in order
to smoothen the economic activities that are to be carried out. There are also major projects that
are to be undertaken in Bagamoyo district, construction and operation of these proposed projects
paves a room for the Bagamoyo pipeline project to be imperative project to be constructed and
start operation so as to fasten the construction of other project (since they need cheaper energy
supply to reduce construction and operation costs). The following project are/are to be
implemented in Bagamoyo district.

Development of Bagamoyo Port

The Bagamoyo Port is a proposed port to be constructed in Bagamoyo, Tanzania. It would be
one of the largest government infrastructure projects in the country. Contracts to begin port
construction were signed in October 2015 and were set to complete phase I of the construction
project in 2017. The project was cancelled by a new government 3 months later in January 2016
(“world-africa-34554524 @ www.bbc.com,” n.d.).

The port is set to handle 20 million teu by 2045 and will be the largest port in East Africa when
completed. The project is to cost $US 11 billion and is mostly funded by a Chinese government
owned construction firm. The project is a tri-government venture between Tanzania, China and
Oman. The port is to handle twice the amount of cargo than Dar es Salaam Port and will help
reduce the congestion at the port. The project also involves in the construction of a Special
economic zone adjacent to the port.

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The Bagamoyo pipeline project will supply the gas to the port construction at the cheaper price
compared to that paid to TANESCO for the electricity supplied.

Bagamoyo port

Bagamoyo SEZ project

A special economic zone (SEZ) is, at regional level (East African Community), defined as a
designated area of land which may, or may not, be a customs controlled area. It is subject to
liberal economic laws and on-site administrative regulation, management and services, the
benefits pertaining to licensed firms apply; and goods introduced into the SEZ customs
controlled area are exempted from duties and taxes.

The national SEZ programme includes development of 14 SEZs located strategically throughout
the country. The Bagamoyo SEZ, and its proposed port, is the first SEZ to be implemented and,
as such, EPZA's current flagship project.

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Export Processing Zone (EPZ) was established in April 2006 by the EPZ (Amendments) Act No.
3 of 2006 as an autonomous agency. The authority is supervised by the EPZA council and
operates under the Ministry of Industry, Trade and Marketing. In 2006, the GoT adopted the SEZ
act. The SEZ scheme was part of a strategy to implement the "Mini Tiger Plan 2020" and aimed
at fast tracking economic growth and poverty reduction. In April 2008, the GoT decided,
following the dissolution of the former Ministry of Planning, Economic and Empowerment, to
assign the implementation of the SEZ scheme to EPZA. Since its inception, 28 EPZ investments
have been registered and 19 operating licences have been issued. The EPZ program has
generated direct employment for 7,500 people and over 20,000 indirect jobs have been created.

The total area allocated to the Bagamoyo SEZ is approximately 9,800 ha in size. The site is
located about 50 km north of Dar es Salaam and about 12 km south of Bagamoyo town. It is well
suited for urban and industrial development as it is relatively flat, dry and vegetation is sparse.
The SEZ is located in the Bagamoyo district, which comprises the Kiroma and Zinga wards.

The economic feasibility study, which was carried out in 2009, regarding the establishment of
Bagamoyo SEZ, revealed that the project was extremely feasible. Aspects which the study
highlighted were the growth of the manufacturing industry, growth of the tourism industry,
availability of raw materials, strategic location of the SEZ and access to African and
international markets.

The project (Bagamoyo SEZ) proposed to place a natural gas pipeline along the coastline to
connect the Mkuranga gas field, the Kiliwani north gas field, the Songo Songo gas field and the
Mnazi Bay gas field. The first two projects are newer finds and can be utilised to meet the energy
needs of Bagamoyo SEZ,

The Bagamoyo Gas Project (Introducing the Project)

The increased energy demand in Bagamoyo district due to the planned project in that area eg.
New Bagamoyo Port, and Special Economic Zone project (SEZ Project), has vastly attracted
investors to invest in the energy sector within the same area plus iif well planned, this project can
help TANESCO gain supply of electricity from a cheaper and more affordable source unlike the

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current source that they gain from SKANSKA JENSEN INTERNATIONAL (T) LTD which is a
private electricity supplier located in Kunduchi(“index @ www.tanesco.co.tz,” n.d.).

This project (Bagamoyo pipeline project) has been positioned to distribute natural gas in
Bagamoyo district. The gas pipeline will be connected from Songas Ltd Ubungo terminal (Dar es
salaam) to a station point in Bagamoyo which will be called Wakanda Terminal and is to be
located at the grounds behind Bagamoyo Seventh Day Adventist Church and Hotel Tanamera in
which this will cover the distance of 65 km in total from Ubungo terminal.
(“data=!3m1!4b1!4m13!4m12!1m5!1m1!1s0x185c4ece585a2437:0x5faecaa2dbfecccf!2m2!1d3
9 @ goo.gl,” n.d.).

Distribution of the natural gas in Bagamoyo district

Natural gas will be distributed to the households and industrial area within Bagamoyo district
from Wakanda terminal, primarily, distribution process will be of two phases, the first phase will
cover the 9,800 hectares of the SEZ project together with port project that include:

 4,560 ha of Industry and roads in the industrial area,

 1,230 ha for Port, marshalling and rail network
 1,000 ha for Residential areas ,
 380 ha for Commercial ,
 900 ha for Institutional ,
 940 ha for Recreation and tourism ,
 465 ha for Open space/traffic areas and
 325 ha for Swamps, pond etc.

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2. MARKETING AND DISTRIBUTION
Energy status
The source of power within the district is TANESCO and solar energy which are used by
individual households or institution. Out of 65 facilities only 22 HF are connected with
TANESCO electricity .More than 14 facilities are connected with solar power and the remainder
have no electricity. The central government is installing electricity posts to Msata –Makurunge
Road which covers 6 dispensaries of which will make access of power to health facilities. Some
dispensaries are in progress to be connected to electricity. Community are being involved in
installing electricity using village funds of which showed success, This includes Kiromo,Zinga
,Kerege and Mapinga where the village government has installed electricity using their own
fund. And the electricity supplied normally ranges from 3 kilowatts per sec to 5 kilowatts per sec
during peak times of the day (for both household and industrial supply) (“index @
www.tanesco.co.tz,” n.d.).

The power supply is at present not particularly reliable with only manual change-over systems in
case of problems and no automatic change-over systems. The existing power system will not
meet the demands necessary to operate a planned special economic zone and port. At present,
there are no gas pipelines in the area (Report, 2013). The report during 2103 there were no gas
pipelines in Bagamoyo, and also till now there is no gas pipelines. This gave us an opportunity to
help the growth and other projects that are likely to be established in Bagamoyo and need gas in
its operation such as the port.

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Distribution and infrastructure
The Pipeline from Ubungo Terminal.

Bagamoyo Pipe

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Gas terminal Location

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Pipeline Phase 1 Distribution

Distribution

Basing on the map above which it was prepared by the special economic zone project our project
will concentrate more in distributing gas to three areas the port, industrial zone and residential
areas as they are the main customers/consumers of the gas. We also expect that the first main -
residential consumers will be the people around urban areas in Bagamoyo district comparing to
the rural areas due to the income status and awareness level of the residents, most of the people
in rural areas are not aware and others perceive that using gas energy is so cost full and is very
risks in terms of leakage but we will arrange for seminars and trainings to motivate them in using
gas as good source of energy which is not expensive as they think but also it is very efficient
comparing to the other energy sources that they are using in their day to day consumption like
charcoal energy (-, n.d.).

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The gas will be taken though a pipeline from SonGas terminal located in ubungo-Dar es salaam
as a whole seller of the gas piped from songo songo field. Songas is the most convenient supplier
of the gas to our project as it just around 65 km from Bagamoyo. the pipeline way will be
constructed following the main bagamoyo road to Bunju area due to the nature of the pipes and
also avoiding destruction of residential areas, then from Bunju because is not much populated the
pipeline will deviate from the main road and take the shortcut way to reduce the cost of long
distance to Bagamoyo town.

Supervisory control and data acquisition (SCADA) systems will be used. Where by this
frameworks can incorporate gas stream control and estimation with other bookkeeping, charging,
and contract frameworks to give a far reaching estimation and control framework for the local
gas utility. This permits precise, opportune data on the status of the dissemination system to be
utilized by the utility, to ensure efficient and effective service at all times.

Construction
The Pipeline
The project is expected to hire a sub-contractor known as LEAD, which is an experienced
Subcontractor to major International EPC Companies/Contractors across the Middle East and
North Africa, and the main reason for selecting Lead ltd, is because they are the most affordable
and ease to reach company plus another reason is selecting them helps Tanzania contribute to
Africa development by using an African owned company. The cost for construction is set at
$5.5million per km as for the conditions in the project for the pipeline and site development
(“details @ lead-ae.com,” n.d.)

Pipeline compressor station

As for the gas compressor station construction cost that will be located in Bagamoyo, the
division of the total cost will be on material and labour cost in which the primary costs for
compressor stations are material cost, approximately 50.6% of the total cost and lead ae ltd offers
on a range from $866/hp up to $1,712/hp (Zhao & Rui, 2014), so depending on the level of hp
needed that will be the cost (e.g. $789,225,630) because hp ranges from Average compressor
station capacity is 11,085 hp with a standard deviation (SD) of 18,948 hp in which a Compressor
station horsepower can range to 217,000 hp (Clowney, 2003).

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Pricing
The pricing of the product from the cost analysis is expected to be offering a 20% profit on price
per wattage offered and as for the connection cost, it will depend on the following.

For Household
Installation cost for connecting to a household supply will be Tsh. 150,000/=.

For Industries
Installation cost for connecting to a household supply will be Tsh. 800,000/=.

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3. FINANCIAL MODEL
This section will entail all possible financial aspects to be observed from the project in a three
statement model that will also express the expected rate of expansion in costs and expected
inflation and the possible fluctuations. Where as in order to avoid exchange rate fluctuation
difficulties; the project will use and manage a stable foreign currency account i.e. USD.

Since the project is expected to run for about 30 years without any part replacement, the project
will also require 5 years for construction of pipeline and site development and the figures given
below will displace in 5 years period in order to cover the whole lifetime of the project.

NECESSARY ASSUMPTIONS FOR EXPECTED GROWTH &

FLUCTUATIONS.
Financial Model Assumptions 2020 2025 2030 2035 2040 2045 2050 2055
Sales Growth (% yoy) 111% 100% 90% 85% 80% 75%
COGS as % of Sales -24% -21% -20% -20% -20% -20% -20%
R&D as % of Sales -49% -37% -30% -25% -20% -15% -10%
Sales and Marktn as % of Sales -169% -138% -120% -110% -100% -90% -80%
General & Admin as % of Sales -43% -32% -30% -28% -26% -24% -22%
Capital Expenditure as % of 33% 20% 5% 5% 5% 5% 5%
Sales
Minimum Cash Balance? 100000

ANNUAL INCOME STATEMENT

($ in Million Except Per
2020 2025 2030 2035 2040 2045 2050 2055
Share Amounts)
Revenue 21,084 58,797 124,192 248,384 471,930 873,070 1,571,526 2,750,170
Cost of revenue (6,873) (14,280) (25,974) (49,677) (94,386) (174,614) (314,305) (550,034)
Gross profit 14,211 44,517 98,218 198,707 377,544 698,456 1,257,220 2,200,136
Operating expenses:
Research, maintainance
(14,396) (28,996) (45,967) (74,515) (117,982) (174,614) (235,729) (275,017)
and development

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Sales and marketing (36,189) (99,221) (171,188) (298,061) (519,123) (873,070) (1,414,373) (2,200,136)
General and
(13,480) (25,429) (39,843) (74,515) (132,140) (226,998) (377,166) (605,037)
administrative
Total operating expenses (64,065) (153,646) (256,998) (447,091) (769,245) (1,274,682) (2,027,268) (3,080,190)
Other Operatn. Expense (5,339) (12,804) (21,417) (37,258) (64,104) (106,223) (168,939) (256,683)
Accruals (4,139) (10,388) (17,586) (31,048) (54,272) (91,672) (149,295) (233,764)
Loss from operations
(49,854) (109,129) (158,780) (248,384) (391,702) (576,226) (770,048) (880,054)
(EBIT)
Bond settlement (356) (1,727) (8,477)
Interest income (exp) (109) (1,764) (3,705) (1,986) 1,352 10,766 23,512 35,448
Other income (expense) 49 116 (26)
Loss before provision
(50,270) (112,504) (170,988) (250,370) (390,350) (565,460) (746,535) (844,606)
(benefit) for income taxes
Provision (benefit) for
1 59 (2,431) - 0 0 0 -
income taxes
Net loss (50,271) (112,563) (168,557) (250,370) (390,350) (565,460) (746,535) (844,606)
Accretion of redeemable
convertible preferred (80) (226) (341)
stock
Net loss attributable to
(50,351) (112,789) (168,898) (250,370) (390,350) (565,460) (746,535) (844,606)
common stockholders
EBITDA (218,620) (354,364) (526,469) (695,518) (805,524)

ANNUAL FINANCIAL POSITION.

DETAILS 2020 2025 2030 2035 2040 2045 2050
ASSETS
Current assets:
Cash and cash 127,625 108,851 206,118 100,000 100,000 100,000 100,000
equivalents
Accounts receivable 17,218 42,669 85,063 161,620 298,996 538,194 941,839
Prepaid expenses and 8,177 7,776 14,903 28,316 52,384 94,292 165,010

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other current assets
Deferred commissions 8,959 7,152 13,661 25,956 48,019 86,434 151,259
Total current assets 161,979 166,448 319,746 315,892 499,400 818,919 1,358,108

Property and equip. net 29,949 41,385 26,823 15,770 10,585 14,786 77,918
Intangible assets, net 830 6,567 6,268 5,940 9,387 17,090 30,687
Goodwill 0 8,081 8,081 8,081 8,081 8,081 8,081
Other long-term assets 3,034 12,948 12,948 12,948 12,948 12,948 12,948

Total assets 195,792 235,429 373,866 358,631 540,401 871,824 1,487,743

LIABILITIES
Current liabilities:
Accounts payable 11,906 12,405 24,498 46,546 86,111 155,000 271,250
Accrued compensation 3,899 16,098 29,806 56,632 104,768 188,583 330,020
and benefits
Accrued expenses and 1,628 14,161 12,419 23,596 43,653 78,576 137,508
other current liabilities
Deferred revenue 38,275 78,282 193,492 340,312 651,148 1,124,906 1,986,434
Deferred rent 504 1,213 2,235 4,247 7,858 14,144 24,752
Debt 968 1,205,830
- 182,489 523,771 934,061
Total current liabilities 57,180 122,159 262,451 653,823 1,417,310 2,495,269 3,955,794

Debt, non-current 30,060 34,000 32,514 16,257 0 0 0

(Revolving Credit)
Deferred revenue, non- 1,824 11,790 11,790 11,790 11,790 11,790 11,790
current
Redeemable convertible 2,869 0 0 0 0 0 0
preferred stock warrant
liability, non-current
Deferred rent, non- 5,125 4,086 4086 4086 4086 4086 4086
current

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Other long-term 491 1,343 1343 1343 1343 1343 1343
liabilities
Total liabilities 97,549 173,378 312,184 687,299 1,434,529 2,512,488 3,973,013
Redeemable convertible 281,899 0
preferred stock:
Stockholders’ (deficit) eq.
Common stock 1 9
Additional paid-in capital 10,129 424,370
Treasury stock -1,177 -1,177
Accumulated other 0 15
comprehensive income
Accumulated deficit -192,609 -361166
Total stockholders’ -183,656 62,051 61,681 -328,669 -894,129 -1,640,664 -2,485,270
(deficit) equity
Total liabilities + 195,792 235,429 373,866 358,631 540,401 871,824 1,487,743
Shareholder's Equity

STATEMENT OF CASHFLOW
DETAILS 2020 2025 2030 2035 2040 2045 2050 2055
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss (50,271) (112,563) (168,557) (250,370) (390,350) (565,460) (746,535) (844,606)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and
amortization 2,838 8,616 17,867 29,764 37,337 49,757 74,530 74,530
Stock-based compensation
expense 6,222 7,536 11,749
Amortization of deferred
commissions 1,688 7,028 13,500
Remeasurement of
redeemable convertible 356 1,727 8,477

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preferred stock warrant
liability
Release of deferred tax
valuation allowance (2,590)
Other
214 628 212
CHANGES IN OPERATING ASSETS AND LIABILITIES, NET OF EFFECTS OF ACQUISITIONS:
Accounts receivable
(4,102) (11,499) (25,157) (42,394) (76,557) (137,377) (239,197) (403,645)
Deferred commissions
(3,108) (14,027) (13,999) (6,509) (12,295) (22,063) (38,415) (64,825)
Prepaid expenses and other
assets (7,478) (2,028) (3,792) (7,127) (13,413) (24,068) (41,907) (70,719)
Accounts payable
3,546 2,046 (3,177) 12,093 22,048 39,565 68,889 116,250
Accrued expenses and
other liabilities 3,048 2,100 24,055 11,966 38,003 68,194 118,737 200,370
Deferred rent
3,467 1,755 (330) 1,022 2,012 3,610 6,286 10,608
Deferred revenue
9,307 26,930 49,973 115,210 146,820 310,836 473,757 861,528
Net cash used in operating
activities (34,273) (81,751) (91,769) (136,344) (246,395) (277,006) (323,856) (120,510)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase+s of marketable
securities (35,814) - -
Proceeds from maturity of
marketable securities 12,000 20,000 -
Purchases of property and
equipment (13,467) (19,499) (24,424) (12,419) (23,596) (43,653) (78,576) (137,508)
Investments in non-
marketable equity - (125) -

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securities
Acquisition, net of cash
acquired and purchases of (1,012) (62) (7,761) (2,484) (2,360) (4,365) (7,858) (13,751)
intangible assets
Net cash provided by (used
in) investing activities (38,293) 314 (32,185) (14,903) (25,956) (48,019) (86,434) (151,259)

Cash Flow available for

Financing Activities (81,437) (123,954) (151,247) (272,351) (325,025) (410,289) (271,769)

(6,786) (10,330)
CASH FLOWS FROM
FINANCING
ACTIVITIES:
Proceeds from borrowings,
net of borrowing costs 10,972 20,353 32,744 - 182,489 341,282 410,289 271,769
Principal payments on
borrowings (341) (577) (30,971) (1,486) (16,257) (16,257) - -
Proceeds from issuance of
redeemable convertible 91,968 150,780 99,944
preferred stock, net of
issuance costs
Proceeds from exercise of
redeemable convertible - - 1,033
preferred stock warrants
IPO Proceeds
250,000
Proceeds from exercise of
stock options 250 2,241 3,003
Payments of deferred
offering costs - - (588)
Net cash provided by (used
in) financing activities 102,849 172,797 105,165 248,514 166,232 325,025 410,289 271,769

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 BAGAMOYO GAS PROJECT
Effect of exchange rate
changes on cash and cash - - 15
equivalents

Net increase (decrease) in

cash and cash equivalents 30,283 91,360 (18,774) 97,267 (106,118) (0) 0 (0)

Cash and cash equivalents,

beginning of period 8,569 36,265 127,625 108,851 206,118 100,000 100,000 100,000
Cash and cash equivalents,
end of period 38,852 127,625 108,851 206,118 100,000 100,000 100,000 100,000

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 BAGAMOYO GAS PROJECT
4. RISKS
This section will focus on the risks (Market risks, Contractual risks, Technological risks, Supply
risks and others etc) that are associated with undertaking of the project by recognizing,
measuring and mitigating all risks.

The price of gas tends to fluctuate rapidly and this will risk the demand and supply as their main
forces of market changes of any commodity. This will gradually affect the cash flow of the
projects.

Contractual risks
The project is going to involve the approval from the government on the use of land for the
pipeline that will be used to carry gas to the Bagamoyo households. Regardless of the project
being for the benefit of the people but also getting the approval it is not easy that may cause
delay on the commencement of the project.

Technological risks
The project needs advanced technology and skilled personnel to make sure that the gas will be
transported in highly conducive situation without causing any leakage. To mitigate this risk we
will enter into the turnkey contract with experienced company for this kind of project. But also
we will provide education to the customers on how to detect if there is leakage and an emergency
number which will help them to call the service providers near the place.

Supply risks
The project has assumed to face risks in terms of supply of materials for operation activities, in
order to curb that the project has arranged the operation and maintenance agreement with the
Schlumberger so as to assure the constant supply of natural gas in the project area.

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 BAGAMOYO GAS PROJECT
5. SOCIAL, ECONOMIC & ENVIRONMENTAL IMPACT
ASSESMENT
Employment opportunities
The project is going to give 600,000 temporarily jobs (during construction period) and 150,000
permanent jobs from the period of construction and during operation of the project. Those jobs
will be offered to both skilled and unskilled personnel depend on the type of work. This will
increase the local economy as well as country through the increase in spending power when
people get income.

Soil degradation
It is the process where soil is altered and loses its potential, quality and productivity. Impact on the soil
will primarily be caused by construction related activities of constructing a pipeline. Land clearing and
earthworks for construction of pipelines from the terminal to the market( residents and industrial) will
likely disturb and expose the earth surface and soils to runoff water and wind, subsequently leading to soil
degradation.

Loss of biodiversity
Clearing of vegetation in preparation of major infrastructure will be at an initial stage. During the
construction phase, clearing and grubbing will begin, and will involve the removal of natural
vegetative cover such as trees and grasses in order to prepare the area for pipelines construction.
These earthworks will exacerbate the landscape, causing erosion and soil infertility. Earthworks
may encroach on natural areas leading to further destruction of different species. The project
may require tree felling, removal of bushes and shrubs, resulting in bare land tracts along the
places where the pipeline pass.

CONCLUSION
The Bagamoyo Gas project is hoped to stimulate the economic activities in the Bagamoyo
district, since, it will carter cheaper energy that will lower costs of production for businesses
operating in the district. The project also will attract investments to flow in Bagamoyo district as
apart from the cheaper energy to be supplied, the construction of new port and the special

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 BAGAMOYO GAS PROJECT
economic zone project, are projected to smoothen business activities within the region since
there will be few trade barriers in terms of regulation and the easy transportation of the products
to the world market through the new constructed port.

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 BAGAMOYO GAS PROJECT
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AFDB. (2012). Bagamoyo Sugar Project - Executive Summary of Environmental and Social
Impact Assessment. Afdb, 1–33. Retrieved from
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Assessments/Tanzania - Bagamoyo Sugar Project - ESIA
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475372F94D22

Clowney, S. L. (2003). Compressor and Pump Station Role of Compressor & Pump Stations.
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6454-47e4-a165-54e21a7c6779

how-many-rural-tanzanians-have-power-c60f4d89697e @ pesacheck.org. (n.d.). Retrieved from

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index @ www.tanesco.co.tz. (n.d.). Retrieved from http://www.tanesco.co.tz/

National Bureau of Standard. (2013). 2012 Population and Housing Census Population
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Report, F. (2013). Bagamoyo sez master plan, (January).

world-africa-34554524 @ www.bbc.com. (n.d.). Retrieved from

http://www.bbc.com/news/world-africa-34554524

Zhao, Y., & Rui, Z. (2014). Pipeline compressor station construction cost analysis. International

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https://doi.org/10.1504/IJOGCT.2014.064426

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