Govt backtracks on Green Fuel deal
By Taurai Mangudhla, Business Writer
Wednesday, 07 March 2012 14:53
HARARE – President Robert Mugabe’s government is reversing its build,
operate and transfer (BOT) deal with Green Fuel on the Chisumbanje ethanol
project under the guise of a joint venture plan.
State Enterprises and Restructuring Agency (Sera) executive director Edgar
Nyoni yesterday told Parliament’s portfolio committee on state enterprises
and parastatals (Seps) that government was restructuring the deal after the
ethanol venture was granted national project status.
“We are currently assisting the ministry of Agriculture (through its
Agricultural Rural Development Authority — Arda) on the Chisumbanje project.
Government is looking to change the deal from a BOT to a joint-venture and
we are currently coming up with the provisions,” he said.
“Negotiations are being made amicably looking at contributions from both
parties…the project involves big pieces of land,” added Nyoni.
Sera’s statement comes as Green Fuel has asked government to introduce a
mandatory blending policy, to make blending of ethanol and petrol compulsory
as an import substitution measure.
The company argues that a mandatory blending policy dovetails with
government’s medium term economic blueprint which stipulates that Zimbabwe
should “promote and use renewable energy including ethanol blending.
However, the proposal is facing challenges particularly from fuel companies
who have raised concerns that they need to allocate a third pump for the
blended petrol, separate tanks, as well as separate transport carriers for
the ethanol.
Currently, conventional bulk petroleum companies’ facilities and retail
filling stations are designed for petrol and diesel only and the
introduction of blended petrol is posing logistical problems to the
operators of service stations and petroleum companies.
The almost 400 filling stations in Zimbabwe have been reluctant to incur the
“additional costs’ to modify or upgrade their existing pumping and storage
facilities. The logistical challenge has resulted in Green Fuel shutting
down, to a loss of about $150 000 potential daily revenue.
Seps secretary Elias Mutowo said the ethanol producer is producing 5 million
litres a month and has capacity to produce 10 million litres monthly,
meaning Zimbabwe’s blended fuel could be moved from E10 with a 10 percent
content of un-hydrous ethanol to E20.
The country, Mutuwo said, could even go up to E85 if the production
equipment meets quality expectations.
The $600 million ethanol production project is a partnership between Billy
Rautenbach’s Ratings Investments, which owns 60 percent of the company, and
Arda which accounts for the remaining 40 percent stake.
Reports have indicated Ratings Investments provided funding while Arda
purchased its equity through land.
At the beginning of the project, more than 5 000 hectares of land were put
under plantation.
By the end of January, Green Fuel had produced 10 million litres of ethanol,
which is currently sitting in storage facilities around the country.
So far, only 105 000 litres has been sold, slightly one percent of the total
ethanol produced.