Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Govt mulls new plan to rescue ethanol project

Govt mulls new plan to rescue ethanol project

Saturday, 03 March 2012 19:03

GOVERNMENT edged closer to introducing mandatory fuel blending last week 
after a crucial meeting endorsed the plan in a move that could rescue the 
US$600 million ethanol project in Chisumbanje.

There has been a slow uptake of ethanol from Chisumbanje as fuel players are 
reluctant to blend the fuel saying it is an extra cost to them since they 
are supposed to have additional handling facilities.

As a result, production stopped after the plant reached its 10 million 
litres storing capacity in December last year.

The ethanol project is a partnership between the Agricultural and Rural 
Development Authority (Arda) and Billy Rautenbach’s Rating and Macdom 
Investments in a 20-year Build-Operate-and- Transfer arrangement to 
transform estates at Chisumbanje and Middle Sabi.

Standardbusiness heard on Friday the plan now awaited the assent of the 11 
ministers that form an inter-ministerial committee.

A piece of legislation via a statutory instrument would be in place to 
ensure the plan takes -off smoothly, sources said on Friday.

Cabinet has been seized with the matter since last year and requested Joseph 
Made, the minister of Agriculture Mechanisation and Irrigation Development, 
to present a detailed report to cabinet on the ethanol project.

Cabinet then resolved the setting up of an inter-ministerial committee 
chaired by Made to coordinate the implementation of the project.

This paper was reliably told there was no way the industry could take up all 
the ethanol as it could only use 10% meaning that the remainder has to be 
taken up elsewhere.

However, financiers have rolled out an ambitious plan that will see 11 000 
hectares under cane this year in Chisumbanje and Middle Sabi up from 7 000ha 
in 2011.

It will rise to 16 000 next year.

At the same time 5 000 ha will be put under cane in Nuanetsi next year. This 
year 120 million litres of ethanol will be produced up from 18 million last 

The production is set to more than double to 252 million litres next year. 
By 2020 fuel production would have reached the 1,5 billion litre mark with 
raw materials coming from Chisumbanje, Middle Sabi and Nuanetsi.

According to the projected rollout, the blending will save US$120 million 
annually in fuel imports. By 2020, the country would have saved US$400 
million from fuel imports.

Currently 10% of the blended fuel contains ethanol and there are plans to 
double that to 20%.

Projected data also show that exports will start in 2015 generating US$60 
million assuming that half of the fuel produced is used for local 
The earnings are set to reach US$1,1 billion in 2020.

Basil Nyabadza, Arda board chairman said last week the project is the only 
route for the parastatal to be self-reliant in line with government’s 
intention for state-owned enterprises to wean themselves off treasury 

The project has seen the recruitment of labour from outside Chipinge and 
more work needs to be done, taking into consideration there is need for more 
schools, clinics and accommodation facilities.

The financiers, Nyabadza said, want to build a US$300 million Kondo dam 
because the project needs more water for its expansion programme.
To get enough cane, villagers in Chipinge have been given a quarter acre 
each to grow cane under contract.

“The raw materials and the final product are coming from a village 
environment thereby creating jobs in the village. This fits well into Arda’s 
vision of rural development,” he said.

Analysts say a holistic approach has to be adopted taking cognisance of the 
concerns raised by fuel players and motorists.

There are also calls for legislation governing ethanol production laying the 
parameters for the fuel industry.

More required before mandatory blending: experts

Experts in the fuel industry told Standardbusiness on Friday, more needs to 
be done before government introduces mandatory blending.

“For players in the industry, they need separate tanks for handling and this 
is an extra cost to operators. Government cannot just force oil companies to 
blend because it is an extra cost,” one expert said.

“In addition, the promoters of the project were telling us that they can 
export (ethanol). The question is why can’t they export?”


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