Biodiesel project faces collapse as RBZ pulls out
Sunday, 12 June 2011 14:13
BY CAIPHAS CHIMHETE
AFTER almost five years of on-and-off operations, Zimbabwe’s giant biodiesel
plant faces prolonged closure after the central bank pulled out of the
project.
Launched amid pomp and fanfare, the project was touted as the panacea to the
country’s fuel crisis.
The Reserve Bank of Zimbabwe (RBZ) has already invited bids for its 50%
shareholding in Transload (Pvt) Limited, a fuel manufacturing company that
never made an impact despite its glamorous launch in 2007.
But investment and economic analysts last week said no local investor would
want to put money in such “a white elephant”.
Foreign investors, say the analysts, would be discouraged by the controversy
surrounding the Indigenisation and Empowerment Act.
The biodiesel plant is a joint venture between Zimbabwe and Yuon Woo
Investments of South Korea.
Government mooted the project when the country was experiencing a fuel
crisis that President Robert Mugabe’s administration blamed on sanctions
imposed on the country by the West.
Labour and Economic Development Research Institute of Zimbabwe (Ledriz)
economist Nyasha Muchichwa said the environment was not ripe for local
investors to put money into such a project.
“Chances are very minimal that anyone would put money into such a project
considering our economic and political circumstances,” he said.
Muchichwa said it had also been very difficult to access the performance,
management and debt structures of the company from the central bank.
But independent economist John Robertson sees it differently.
The project, he argues, would find takers should it be sold at a reasonable
price.
He said the plant had lots of valuable equipment which could be put to good
use.
“We have oil producing companies such as Olivine, United Refineries and
National Foods which might need the equipment,” Robertson said.
Efforts to get a comment from Transload Bio-diesel Company of Zimbabwe
managing director Douglas Musiiwa were fruitless last week as he kept
postponing the interviews.
Last year, he told The Standard that the project needed US$650 000 capital
injection to cover cost of seed, transportation and toll-crushing to extract
cooking oil as well as salaries before resumption of any operations.
Lack of inputs, non-existent demand for biodiesel
Kingdom Financial Holdings (KFH) head of economics and research, Witness
Chinyama, says it would be difficult for anyone to invest in a biodiesel
project whose product has no demand on the market.
There has been no meaningful production at the plant, the first of its kind
in Africa due to the shortage of inputs such as Jatropha seed, soya bean
seed as well as lack of capital.
Chinyama advised government to keep the project and dispose it when there
was demand for biodiesel fuel in the country.
“No private individual would be interested because there is no market for
the biodiesel fuel at the moment,” said Chinyama.
“The government should see it through and sell it at a time we have cars
using the fuel … when there is demand for that particular fuel.”
Motorists were even sceptical of the little fuel that trickled out of the
giant machine when it was still operational.