Administration Process

Repayable contributions will be provided to eligible investors of biofuel facilities pursuant to the signing of a contribution agreement between the eligible applicant and EI.

The administration process will involve several steps, including:

1. funding proposal;
2. contribution agreement;
3. verification of construction/begin construction;
4. commissioning of the facility/SaskBIO contribution;
5. confirmation of continued Saskatchewan investment; and
6. repayment.

Step 1:  Funding Proposal

• Applicants must complete and submit the SaskBIO Application Form with all required supporting documentation to EI. The funding proposal highlights the major project plans, including location, type of biofuel, capacity, construction and commissioning dates, financial viability, and levels of Saskatchewan ownership. The Application Form and the list of required documents is available from EI online at http://www.ei.gov.sk.ca/SaskBIO.
• The funding proposal may be submitted at any time during the year.
• EI will process the funding proposals as they are received.
• After receiving the completed Application Form with supporting documentation, a committee will review the material. The review committee will consist of employees of EI, Environment, Agriculture, and other government ministries that may be required from time to time. The review committee will make a recommendation to the Minister of EI on the acceptance of the funding proposal.
• When EI approves the application, the applicant will be placed in the queue for funding as it will be allocated on "first‑come, first-served" basis. This confirmation does not imply approval of funding; it holds a place in line for the applicant should they successfully complete the remaining steps. EI will notify the applicant within 60 days of receiving a complete application, to confirm the status of their project.
• After confirming approval of an application with the applicant, EI will post the following information on the website http://www.ei.gov.sk.ca/Approved-Applicants:
  • name of the applicant's organization;
  • date that the applicant entered the queue for funding;
  • location of the proposed facility;
  • type of biofuel to be produced;
  • capacity of the new proposed facility or proposed increase in capacity of the existing facility;
  • expected date for start of construction;
  • expected date of commissioning;
  • estimated percentage of Saskatchewan investment; and
  • the type of feedstock used in the proposed facility's production.

Step 2: Contribution Agreement

• At this point, the applicant and EI will negotiate the terms and conditions for the contribution agreement.
• Once negotiations have been finalized, EI will submit the final draft of the contribution agreement to Cabinet and the Lieutenant Governor in Council for approval.
• Proof of an approved environmental assessment under The Environmental Assessment Act and other required permits must be submitted to EI.
• Upon receipt and acceptance of proof of the environmental assessment, the contribution agreement will be executed by both parties.
• Once the contribution agreement is executed by both parties, EI will provide the applicant with documentation outlining the contribution that the applicant is eligible for under SaskBIO. This documentation can be used to provide other funding sources with SaskBIO's intent to contribute to the project should the applicant meet all of the terms and conditions as outlined in the contribution agreement.

Step 3: Verification of Construction/Begin Construction

• After signing a contribution agreement, the eligible applicant has nine months to commence construction.
• For the purposes of SaskBIO, start of construction will include confirmation of ordering of major equipment.
• To demonstrate that its production facility is under construction, the eligible applicant must provide the following information to EI:
  • executed financial agreements to provide for adequate financing of the project;
  • a letter from a technology provider confirming the purchase order of the technology, total nameplate capacity ordered and expected date of delivery; and
  • a report from a professional engineer, acceptable to EI, validating that construction progress has occurred and confirmation of the anticipated commissioning date.
• Upon receiving the above information, EI verifies its accuracy and issues a notice to the eligible applicant confirming satisfactory completion of these three conditions.
• Failure to verify the start of construction during the allotted time can result in the termination of the contribution agreement for a project. If the circumstances delaying start of construction are deemed satisfactory by EI, EI may extend the timeframe for the start of construction for an additional period of two weeks. Any extension beyond two weeks is considered to be a material change to the agreement and will require approval of Cabinet and the Lieutenant Governor in Council. If the contribution agreement is terminated, the funds become uncommitted and EI may use these funds to enter into contribution agreements with other applicants. An applicant can re-apply six months after the termination date; however, the applicant must start at the beginning of the process and loses their place in the queue.

Step 4: Commissioning of the Facility/SaskBIO Contribution

• Once plant construction is complete, a commissioning report signed by a professional engineer, acceptable to EI, must be submitted by the eligible applicant to EI.  This report must state the actual commissioning date of the facility, and its nameplate capacity upon completion of the project.
• If the nameplate capacity has declined, the contribution payment will be adjusted accordingly. If the nameplate capacity has increased, the contribution payment will not be adjusted upwards.
• To be included with certification of nameplate capacity, the applicant must submit quality standard testing that verifies that the transportation biofuel produced at their facility is fit to blend in gasoline or diesel fuel in Saskatchewan.
• At this stage, the eligible applicant must validate the actual level of eligible Saskatchewan investment. If the level has declined, the contribution payment will be adjusted accordingly. If the level has increased, the contribution payment will not be adjusted upwards.
• EI will pay the recipient after satisfactory completion of the three above-noted conditions.
• If the eligible applicant cannot commission the transportation biofuel production facility within 30 months of signing the contribution agreement, the eligible applicant must demonstrate to EI its ability to complete the facility in a time period acceptable to EI. The Minister of EI may amend the agreement to extend the construction completion date by two months. Any extension beyond this, however, will be a material change to the agreement which will require the approval of Cabinet and the Lieutenant Governor in Council. If the eligible applicant cannot provide satisfactory assurances of its ability to complete the project within an acceptable timeframe, EI will issue a notice terminating the contribution agreement and no contribution will be made to the project.

Step 5:  Confirmation of Continued Saskatchewan Investment

• To ensure that eligible Saskatchewan investors remain involved in the project, the recipient must report on levels of Saskatchewan equity investment in the first and second years after the project has been commissioned at nameplate capacity. If eligible Saskatchewan investment has declined in either year from the levels specified in the contribution agreement, the recipient is required to repay an amount to adjust to the lower levels. If eligible Saskatchewan investment has dropped below the five per cent minimum requirement, the total program contribution will be immediately repayable with interest accruing from the commissioning anniversary.
• No upward adjustment of the contribution will be made where eligible Saskatchewan investment has increased.

Step 6: Repayment

• Program funding is in the form of repayable contributions.  The total amount contributed to a recipient is repayable under conditions of profit.
• Except where repayment results from early termination of the contribution agreement, repayment is interest free.
• Repayment begins onJanuary 1 of the year following the year in which the third fiscal year end falls after the funded facility commences production at its nameplate capacity, and continues for seven subsequent years or until repayment totals the amount of the contribution made to the recipient, whichever comes first. Where the fiscal year end falls within 180 days of a repayment date, the repayment date shall be 180 days from the date of the fiscal year end.

• For each year, the recipient repays an amount calculated based on the three previous audited financial statements as follows:

Formula:

Where, in the opinion of the Minister of EI:

"Average Gross Income per Litre" means:

1. 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 the first year of repayment, calculations will be based on gross income generated by the project over the previous 25 to 36 months depending on the fiscal year of the applicant.
2. 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, 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, which means all products produced other than biofuel such as distiller's grain and carbon dioxide, produced.  Sales include 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, depreciation, insurance, and taxes.

• If the average gross income per litre is $0.20 or less, the repayment for that year will be zero.

For more information, contact:

SaskBIO Program
Ministry of Enterprise and Innovation
200, 3085 Albert Street
Regina, SK S4S 0B1
E-mail: SaskBIO@gov.sk.ca  
Telephone: 306-787-4484