Ministers haggle over ethanol project
Sunday, 20 May 2012 11:34
BY KUDZAI CHIMHANGWA
TWO Cabinet ministers have questioned the manner in which the ethanol
project in Chisumbanje in Chipinge was started in a new twist to the US$600
million venture. This comes as the promoters have been at the doors of the
ministry of Energy and Power Development in a bid to force the introduction
of mandatory blending and save the project from collapse.
There has been a slow uptake of ethanol from Chisumbanje, as fuel players
are reluctant to blend the product. 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 (BOT) arrangement to
transform estates at Chisumbanje and Middle Sabi.
Rautenbach’s company, Green Fuel, is advocating government endorsement to
make it mandatory for fuel companies to blend petrol with ethanol, but
Finance minister, Tendai Biti, said there were outstanding issues that had
to be addressed first.
Biti said the investor had taken huge Arda estates to produce sugarcane and
the Zimbabwe Development Trust, which owned land in Naunetsi constituting 1%
of the country.
“So that estate is now about 4% of Zimbabwe. That land was not bought, it
was taken for free,” said Biti. “So the government of Zimbabwe is saying
what is the ownership structure now because you have taken all this land
which you have not paid for. you have put US$200 million or US$300 million,
but that is not equal to 4% of Zimbabwe. That must be clarified.”
Biti said the other issue relates to technology, adding that scientists must
explain whether Zimbabwean cars are ready for blending and at what
percentage.
“The third one, is a ministry of Finance issue. The ethanol is being sold at
US$0,10 less than the ongoing price of hydrocarbons.
“The price of our ethanol production has got a fixed cost structure. How
then do you say it’s 10% of a volatile, flexible thing, yet we know the
prices of hydrocarbons are not determined by cost structures — they are
determined by politics. That is where we are saying, you are being greedy
and we will not accept it,” said Biti.
The project has continued to be shrouded by concerns to do with
transparency, as government has not been forthcoming in protecting the
venture.
Energy and Power Development minister, Elton Mangoma, told stakeholders at
an energy synergy meeting last week that mandatory blending would go against
market liberalisation in the petroleum industry.
Mangoma said several ministers were distancing themselves from the project’s
creation, raising fears that the process had not been done properly.
Cabinet set up an inter-ministerial taskforce headed by Agriculture
minister, Joseph Made, to spearhead an assessment of the project, but
Mangoma said that Green Fuel representatives were continually approaching
him and avoiding the taskforce.
“This thing takes time. The viable option is that Green Fuel should be given
the opportunity to export. As long I’m minister, I will protect the
interests of the majority. I don’t want to go into the pricing, the facts
are so murky, and these things must be done properly. Green Fuel has been
given an opportunity to work with government,” said Mangoma.
Mangoma said government was prepared to issue out licences for ethanol
blending, right up to E100, but this would all depend on what the market
wanted.
“We have to plan and co-ordinate this (biofuel) issue. it’s a confidence
thing. To cobble the policy in an inclusive government is very difficult,”
he said, adding that Zimbabwe had no policy to make E10 mandatory.
Biofuel energy is anticipated to help cut the country’s massive fuel import
bill, provide energy supply security, promote rural development and
investment, as well as reduce poverty.
Sugar, which is a key element for ethanol production, takes 12 months to
mature in Zimbabwe while elsewhere, it can take up to 15 months or more.
‘Comprehensive policy on biofuel vital’
Ambassador of Brazil to Zimbabwe, Maro da ‘Silva, told delegates that Africa
would be one of the best places in the world in the production of biofuel
due to the abundant sunlight and a wide market.
“The use of biofuel in Zimbabwe will depend on the decisions that are made
now. Forty-five percent of our own energy matrix comes from biofuel,” she
said.
“There is need for a comprehensive policy for ethanol production, as the
state has a pivotal role to determine what’s best for the country.”
She said up to 70 000 small farms in Brazil were producing ethanol, with
millions of jobs created by the ethanol industry, while 8% of vehicles
produced in that country were flexi-fuel, meaning they could use both
ethanol and non-ethanol blended fuel.
A 2009 study, titled Bio-Fueling Southern Africa, focusing on Malawi,
Mozambique and Zambia, acknowledged that the introduction of bio-fuels would
reduce dependence on petroleum products, stabilise fuel prices, and create
employment, among other benefits.