Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

***The views expressed in the articles published on this website DO NOT necessarily express the views of the Commercial Farmers' Union.***

Green fuel to revolutinise local market

Green Fuel to revolutinise local market

Taking shape … The ethanol plant at Chisumbanje
11/04/2011 00:00:00
by Gilbert Nyambabvu

GREEN FUEL, a $600 million agro-industrial and renewable energy complex 
under development at Chisumbanje in Manicaland is, this June, expected to 
produce its first litre of ethanol in a development that could potentially 
revolutionise the local fuel market by addressing the twin-challenges of 
cost and security of supply.

As a net importer, Zimbabwe is vulnerable to the vicissitudes of the global 
oil market where crude oil prices have risen 75 percent since the second 
quarter of 2010 and supply concerns continue on the back of political 
instability in the Middle East.

Management at Green Fuel – a joint venture between the state-run ARDA and 
private investors — say when fully operational, the project will produce 
enough ethanol to significantly cut-down Zimbabwe’s fuel import bill and 
help end shortages the country experiences all too frequently.

Cheap alternative

Globally, the oil majors are also turning to ethanol as a renewable and 
cheaper alternative to petroleum with BP chief executive, Bob Dudley noting 
in February 2011: “There will obviously be a time when oil will run out and 
with that prospect on the horizon we will use more renewable energy 

Dudley added that his firm was committing 40 percent of its research on 
renewable energy resources for the year to Brazil ethanol, describing it as 
an “ultra-potent fuel that could revolutionise the market”. Not to be 
outdone, Royal Dutch Shell also announced that it had set-up a US$12 billion 
joint venture with Brazil’s biggest sugar and ethanol producer.

The interest in Brazil is logical. The country has the second largest 
national fuel industry after the United States and 85 percent of vehicles on 
the country’s roads have flexi-engines which run on either ethanol or petrol 
or a mixture of both.

Green Fuel have also modeled their project on Brazil which took this path 
more than three decades ago when one litre of ethanol was three times more 
expensive than a litre of petrol.

The company envisages putting up to 50 000 hectares of ARDA land at 
Chisumbanje and Middle Sabi under sugarcane which will supply at least three 
ethanol production plants.

Already, US$200 million has been invested in the project, rising to US$270 
million by December 2011 when 11500 hectares of land will be under 
sugarcane, producing some 40 million litres of ethanol.


“We will be producing ethanol at a much cheaper cost than we are currently 
importing petroleum products into the country,” general manager, Graeme 
Smith told recently.

But the government and the local fuel sector will have to buy-into the 
vision for the project to work.


Elsewhere, the US government subsidies ethanol production and has introduced 
legislation encouraging the use of blended petrol. Senators are also pushing 
for legislation forcing 90 percent of vehicles sold in the country by 2016 
to be capable of running on E85 blend — fuel that is 85 percent ethanol, 
and 15 percent petrol.

In Brazil the government has, since 2007, fixed the mandatory blend at 25 
percent ethanol and 75 percent petrol which is known as E25. The local car 
industry has responded by boosting production of flexi-engine cars with 85 
percent of new vehicles sold in the country able to run on 100 percent 

Smith says the necessary legislative framework for ethanol use on vehicles 
in Zimbabwe is already in place while the government has backed the Green 
Fuel project by giving it National Project status.

“Legislation is in place and has always been in place since the 1970s in 
terms of blending petrol and ethanol because of the water requirement. Our 
ethanol will be anhydrous (without water),” he said.

“We have also held discussions with the local distribution network and they 
are very supportive of the project”.

The company says vehicles manufactured after 2002 can use E50 (petrol 
blended with 50 percent ethanol) without the need for any modification while 
drivers keen to run on 100 percent ethanol will require a software 
modification that costs up to US$40.

“Vehicles made between 2002 and 1997 can run on 50 percent blend. Those made 
before 1997 can only use E20 although we do not have many such vehicles on 
the road. The company will also provide facilities for the software 
upgrades. It is very viable for us to do that,” he said.


Still, the key question for motorists will be how much better the ethanol 
option is. Critics point out that ethanol is 34 percent less energy 
efficient than petrol which means drivers have to make more trips to the 
pumps. They add that ethanol can only be transported by road since it would 
pick up water and impurities in pipelines which adds to its cost.

Even so, ethanol also has a lower average price per litre than petrol. A US 
Energy Department report for January 2011 noted that a gallon of petrol sold 
for an average US$3.08 against US$2.72 for ethanol. Again, US ethanol is 
produced from maize which is more expensive than producing it from 

There are also other challenges for the Green Fuel project. Shareholders 
have had to provide all the funding to date because of a lack of capacity in 
the local financial market.

“It has been a large challenge to source financing for the project since the 
local banks do not have the capacity while sanctions have also put-off 
potential investors. At the moment the funding is coming from our Zimbabwean 
shareholders,” Smith said.

Again it is also predictable that a project of such magnitude would face 
political problems in a country where land is a sensitive issue and some 
politicians are uncomfortable with the arrangement between ARDA and its 
technical partners.

The project is being developed on a Build, Operate and Transfer arrangement 
under which ARDA has given two private companies a 20 year-lease on the land 
with automatic rights of renewal.


Already, near-on 3000 people have been employed with company officials 
saying 7000 more jobs would have been created by the completion of all the 
development phases, effectively transforming Chisumbanje into a significant 
agro-industrial area.

But some politicians are not satisfied.

Said Agriculture, Mechanisation and Irrigation Minister, Joseph Made in 
March last year: “I am very concerned about ARDA going into joint venture 
operations that do not reflect the 51-49 percent government-stipulated 
shareholding structures. ARDA is free to enter into joint venture operations 
as long as they reflect the 51-49 percent ownership (requirement) or even 

Smith insists that shareholders in the companies partnering ARDA are 
Zimbabwean; but accepts that there is considerable risk in operating in a 
country where the politics are unpredictable at best.

“It’s a risk that the shareholders and investors believe is worth taking. 
Look: who has invested in this project? These people are all Zimbabweans; 
they know the country; they know the people and they know the politics,” he 

“Yes, there is a reasonable amount of risk; but I don’t think it’s a high 


New Posts: