Green fuels: National interest must prevail
http://www.theindependent.co.zw/
Friday, 04 May 2012 10:17
THE unfolding saga over Green Fuel’s Chisumbanje ethanol fuel project makes
for some sad reading indeed, giving the impression that the country is
jinxed when it comes to investment,sorting out its fuel security.
Green Fuel, a 70-30 joint venture between private investors led by Billy
Rautenbach on the one hand and government on the other, appeared to have
been a panacea not only to the country’s fuel challenges when it was
launched two years ago but also to the economy as a whole, starting with
the Lowveld in which the project is sited. What with the 5000-odd people
that would be directly and indirectly employed by the project.
What with 500 or so farmers whose business boosted by the project’s demand
for at least 50 000 hectares to be put under sugar cane. And consider the
120 megawatts that would be generated from burning bagasse, the waste from
cane once its sap has been extracted.
This was said to be enough to power the whole of the Manicaland province in
which Chisumbanje is located. And what of the multiplier effect of all these
activities? To cap it all, US$600 million was to be spent in the venture,
which would fully become government-owned after 20 years under a Build,
Operate and Transfer (BOT) system.
In terms of its core business, the plant could produce up to 2,8 million
litres of fuel daily, nearly three times Zimbabwe’ daily requirements, which
fuel had the further advantage of being environmentally-friendly, hence the
word Green in Green Fuels. The surplus, of course would be exported, earning
the country the ever-scarce foreign currency. Could Zimbabwe, which was
coming out of economic doldrums, ask for more?
However, the ethanol plant is threatening yet another white elephant.
Elsewhere in this issue, we are told that government has thrown out Green
Fuel’s proposals for the compulsory blending of the ethanol it produces
with ordinary petrol. Green Fuel general manager Graeme Smith was this week
quoted as saying the company was lobbying government to put in place
legislation to compel all oil companies to blend their fuel with
locally-produced ethanol.
Such an approach, though, smacks of the very authoritarianism that has
become an anathema in Zimbabwe through acts such as Posa, Aippa, land reform
laws and indigenisation acts. Energy minister Elton Mangoma has a point in
indicating that that Parliament should not enact laws to help individual
companies make a profit. That would set a bad precedent.
However, it is very important for the nation to support the Green Fuel
initiative, given its economic advantages outlined above. After all, this is
not the first time Zimbabwe has resorted to blending ethanol with imported
petroleum. During the sanctions busting era of UDI an ethanol plant was set
up and this received a new lease of life in 1983 following the fuel crisis
of 1982.
A blend of ethanol from that plant and petrol is what Zimbabwe had been
using ever since. What has been labelled as “blend” at all service stations
is in fact the very same type of product that Green Fuel is producing. It’s
only at the height of fuel shortages during the hyperinflationary era that
the majority of Zimbabweans began using unleaded petrol, as shortages
implied that deliveries had to be made immediately, obviating the need for
blending. Prior to that, unleaded petrol had been used only by the elite as
it was more expensive.
It appears this is where Green Fuel has failed. Its product has been priced
in such a way that it is uncompetitive. Given the small price differential
(US6-8 cents per litre) between Green Fuel’s E10 (the old blend) and the
longer lasting unleaded petrol, the average motorist will opt for unleaded.
In Brazil, the largest producer of ethanol in the world, ethanol producers
get subsidies from government since they are an entire industry and not an
individual company. Zimbabwe cannot afford that. Green Fuels has to come out
in the open about its cost structure so that viable prices can be charged.
But above all, the project must be viewed as a national economic venture and
not a theatre for politicians to settle scores and indulge inself
aggrandisements.In the end, national interest — not individual agendas —
must prevail.