Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Ethanol fuel prices explained

Ethanol fuel prices explained

Thursday, 10 May 2012 17:49

GREEN Fuel has dismissed claims by government that it has not furnished it 
with the cost structure into its wholesale price of E10.
Senior officials of the company outlined its cost structure at a meeting 
between it, the Zimbabwe Energy Regulatory Authority (Zera), and the Inter 
Ministerial Pricing Sub Committee in March.

Officials said Green Fuel was not responsible for the pump price of fuel, 
which government and other stakeholders would like to see much lower than 
the US$1,36 a litre being charged by retailers. The Green Fuel spokesperson 
said the company wholesaled its E10 fuel at US$1,00 and this was at 19 cents 
discount to what the company ought to charge. The wholesale price was 
disclosed to all potential ethanol fuel dealers, including those that 
visited Green Fuel’s stand at the recently-ended Zimbabwe International 
Trade Fair.

“The current selling price of the ethanol blended fuel is at a discount of 
US 19 cents so as to encourage market up-take,” one official said.
However, government still insists it has not received the official costing 
structure of theE10 fuel. Government is a 30% stake joint venture partner in 
the project through the Agricultural and Rural Development Authority.

Agriculture minister Joseph Made this week reiterated his assertion in an 
interview with the ZBC that government is yet to be furnished with the full 
pricing structure of E10 fuel. Expectations are that the fuel should be 
retailed  much cheaper than 100% unleaded fuel. E10 blend is a nine-to-one 
blend between unleaded petrol and ethanol.

Although government denies having full knowledge of the E10 pricing 
structure, minutes seen by the Independent of a meeting held  among the 
Zimbabwe Regulatory Authority, the Inter-Ministerial pricing Committee and 
Green Fuel on March 14  this year, indicate  the pricing structure was 

According to the minutes Bianca Rautenbach highlighted that the current 
selling price of US$1,00 instead of US$1,19 was implemented to encourage 
market up-take despite that some costs, including processing cots had gone 

Rautenbach said the processing cost had gone up from US 7 cents to US 13 
cents. The processing expense included costs relating to chemicals and 
associated inputs for distillery. This was after Zera had enquired if there 
was documentation to support the cost structures. Green Fuel highlighted 
that cost figures did not take into consideration the inflation factor.

In the meeting, Rautenbach said the total cost for cane production was US$35 
million of which 8% needed to be paid to Arda in terms of the 
Buy-Operate-Transfer (BOT) agreement.

Rautenbach also said ethanol only makes up 10% of the E10 petrol blend and 
this has a limited ability to affect the price.

Green fuel officials say the current US 6 cents saving to the consumer on 
purchasing E10 petrol has a large saving to the economy.

The Zimbabwe Regulatory Authority raised the issue of Value Added Tax on 
cane but Green Fuels said ethanol was exempt from paying.Green Fuel said the 
total of US$12,5 million was set aside for working capital requirements.

Storage and handling fees amounted to US$5,2 million. Green Fuels has to pay 
back its US$25 million loan.


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