Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Govt faces US$300m Green Fuel tab

Govt faces US$300m Green Fuel tab

11/06/2012 00:00:00
by Staff Reporter

THE government would have to pay more than US$300 million to complete its 
proposed takeover of the Green Fuel ethanol project, sources close to the 
company have insisted.

Agriculture Minister Joseph Made announced Monday that the government had 
taken over majority control of the US$600 million project in line with the 
country’s economic empowerment laws.

But in a statement the company insisted that: “The shareholding of the three 
companies (involved in a project) is currently held by Zimbabweans.”

Sources close to the company said if Made insists on pushing through the 
takeover, the government would have to pay more than US$300 million for the 
51 percent shareholding.

Made claimed the 20-year Build, Operate and Transfer agreement between 
agricultural parastatal Arda and two private companies involved in the 
project was illegal.

“Cabinet concluded that the BOT agree­ment signed between Arda and Green 
Fuel and other partners was null and void as it has not been autho­rised by 
Government through Cab­inet,” Made said.

But in a statement, Green Fuel said the BOT deal did not involve the ethanol 
plant at Chisumbanje and only related to the Arda lands on which the 
parastatal and its joint venture partners, Rating Investments and Macdom, 
were growing sugar cane.

“Green Fuel is a standalone private company built on land leased directly 
from the Chipinge Rural District Council in order to facilitate easy access 
to the cane grown on the estates of Rating and Macdom,” the company said.

“Green Fuel’s core business is to buy sugar cane from Rating, Macdom and 
other growers for processing into sugar or ethanol. Green Fuel has not, nor 
has it ever, had a contractual relationship with Arda.”

The company also denied Made’s claim that its agreement with Arda was 
irregular adding the Minister was kept abreast of developments from the time 
the project was initiated.

“The B.O.T agreements between Arda and the two agricultural companies, 
Rating and Macdom, were entered into in compliance of the Agricultural and 
Rural Development Authority (ARDA) Act,” the company said.

“They were approved by the Arda Board and signed on the 19th of March 2009 
by Arda’s General Manager in terms of Section 17 of the said Act.

“There is correspondence between Arda and its parent ministry of 
Agriculture, Mechanisation and Irrigation Development indicating that the 
Minister was involved in, and kept abreast of, all the negotiations and 
legal formalities leading to the finalization of the B.O.T agreements.

“Finances were raised towards the cane projects on the strength and basis of 
the agreements which have been verified as legally valid and binding by 
independent legal experts.”

The company has since suspended production at the Chisumbanje mill after 
exhausting storage capacity. Efforts to get the government to endorse 
mandatory blending of petrol and ethanol have so far been unsuccessful while 
market uptake of the company’s E10 product remains limited.

An independent energy analyst warned: “This shift of policy from active 
support to complete takeover could jeorpadise the whole investment vision 
which presents five thousand jobs now with a potential to reach 10 000 at 
full commissioning of the  project.

“While ministers haggle over the Green Fuel project, events on the ground at 
Chisumbanje are increasingly disconcerting. Green Fuel has sent home some 
hundreds of workers due to the slow ethanol sales.

“Oil companies are reportedly indicating they cannot stock E10 in most of 
their garages because there is no additional storage, hence the product 
glut, but this could also be symptomatic of cartel behavior which is typical 
of the oil sector.”


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