A Sweet Deal
Windhoek – Just last year, it looked as if the massive Chisumbanje Ethanol Plant in eastern Zimbabwe would turn into the clichéd white elephant. And not just any other white elephant: a US$600 million white elephant.
That was after the plant shut down because there were no takers for the ethanol. The plant can store up to 10 million litres of ethanol.
But political bickering between parties who were supposed to be partners in a coalition government saw to it that the produce from the plant did not find its way onto the market.
After the July 31, 2013 elections ‑ decisively won by ZANU-PF ‑ the plant is really back in business.
Recently, President Robert Mugabe’s government instituted a mandatory ethanol-blending ratio for petrol of 10 percent, and this will rise to 20 percent over the next year.
With the country using 1.5 million litres of petrol daily, this means the Chisumbanje plant will initially put 150 000 litres of ethanol on the market every day. The plant can produce more than 350 000 litres per day. By 2020, the plant will churn out 500 million litres of ethanol annually, which will be enough to complete substitute all petrol imports.
Zimbabwe can save up to US$2m in imports daily through ethanol. The benefits are obvious: use of ethanol will slash the fuel import bill, create jobs, add value to local industry, and reduce harmful carbon emissions.
Now, several countries in Southern Africa are interested in buying ethanol from Chisumbanje. It is understood that Botswana, Malawi, Mozambique, South Africa and Zambia have initiated contacts regarding this matter.
Green Fuel, which runs Chisumbanje Ethanol Plant (a joint venture between the state-owned Agricultural Rural Development Authority, Macdom Investments and Rating), has said they are prepared to supply SADC with its environmentally friendly produce.
The GM at Green Fuel, Graham Smith, says, “We have been approached by Zambia, Malawi, Mozambique, Botswana and South Africa, which have introduced blending of petrol to ethanol at varying levels.”
There is a fear that ethanol might not be compatible with the engines in use today – a concern that experts say is not sufficient to jettison blending.
Placing a flex-fuel conversion kit link on the engine to enhance oxygen intake into the pistons is all that is required to make an ordinary petrol vehicle run on 95 percent ethanol. The flexi link costs about US$40 in Zimbabwe.
Environmentalists also point out that the sugarcane in the fields recaptures the carbon produced from burning ethanol.
Further, ethanol production has by-products such as animal feeds and electricity. The Chisumbanje plant generates 7MW. It uses 2MW and sells the other 5MW to independent buyers or the national grid.
Use of ethanol blend is in line with a growing global trend to not only cut down on import bills, but also to increasingly use environmentally friendly fuels.
Countries like India, Thailand, Latin America, the US, several in Europe and Australia have a minimum blending requirement of five percent. In most parts of the world, lead additives in petrol have been eliminated. Africa, largely, remains the exception.
It is in this context that investment in ethanol production becomes critical. Chisumbanje Ethanol Plant is the single biggest infrastructure investment Zimbabwe has seen since the construction of Kariba Dam in the 1950s under the Federation of Rhodesia and Nyasaland.
Africa Investor magazine has rated the Chisumbanje project as one of the continent’s 100 largest infrastructure development programmes. (Five Zimbabwean projects are in the top 100.) The magazine classifies mega projects as those with a budget of more than US$1m, take more than five years to complete, affect the lives of more than a million people, and have far-reaching economic implications – often beyond the borders of the countries in which they are implemented.
The Chisumbanje project covers 120 000 hectares of land, most of which is under sugarcane for the ethanol plant. By switching to even a minimum of five percent ethanol blend, SADC countries could save hundreds of millions yearly and cut down on harmful tailpipe emissions.
Investment in such infrastructure projects will result in greater regional integration and development. By any measure, this is a sweet deal. According the Cane Resources Network for Southern Africa, investment in ethanol is a win-win.
In a report titled “Bio-energy for Sustainable Development and Global Competitiveness: the case of sugarcane in Southern Africa”, the network’s researchers say the time is perfect for going green.
“Like the rest of the world, the sugar industry in southern Africa has faced increasing competitive pressures in recent years due to factors such as, saturated demand in industrialised countries and competition from other sweeteners, which has resulted in low and/or fluctuating sugar prices.
“These difficulties have increased economic incentives for sugar producers to diversify their product portfolio by investing in renewable energy applications.” SADC produces more than five million tonnes of sugar yearly (3.5 percent of global production) but around 40 percent of if goes to the EU and the US.
This is largely due to the existence of export quotas, but also indicates a lack of appreciation of how sweet sugar could be to regional economies. Apart from the most obvious benefits, investment in sugar would greatly boost the standards of living of small-scale farmers.
The Cane Resources Network for Southern Africa says, “Smallholder participation in the sugar industry has been encouraged in some countries, but the contribution of the sector in terms of cane production is often small.
“Smallholders account for around 25 percent of cane production in Mauritius, 20 percent in Zambia and 15 percent in South Africa. “In Malawi, Swaziland, Zimbabwe, and Mozambique, smallholders typically account for less than five percent of cane output.
“In South Africa, the industry is responding to the government’s target of 30 percent black freehold agriculture land ownership by 2015. This translates into the transfer of 78 000ha of privately owned land in addition to the 18 000ha transferred back into black ownership over the past decade. “SADC that are able to expand (primarily lower cost centres), will have the opportunity to offer greater smallholder participation.”
The Biofuel Option
Nearly 70 percent of the entire population in the SADC region is dependent on fuelwood for cooking, heating and lighting, with no access to modern fuels for these and other applications such as driving machines for water pumping, transport and soil tillage.
As a developmental goal, the farming for energy crops and the production of boifuels for own use by rural farmers can be a sure way of increasing access to modern energy services by rural populations, increasing rural productivity and hence rural development.
The cash that will be earned by rural smallholder farmers will also go towards rural development.
The SADC region, therefore, has a lot to gain by producing biofuels to substitute imports of petrol, diesel, kerosene and LPG and for electrical power generation
Most SADC countries have a large percentage of their arable land being currently not utilised for agricultural food production. This presents an opportunity for putting this un-utilised land into biofuels crop farming.
The energy policies in most countries as they currently stand are not comprehensive enough. These need to [be] revised in order to seriously address new and renewable energy options.
The biofuels sector needs to be integrated into the mainstream petroleum energy sector paying particular attention to production, transportation, marketing and pricing issues.
World over, the market for biofuels has been created by regulatory interventions in order to facilitate the entry of biofuels into the conventional energy market.
In order to attract investors in the sector, it is necessary to have a comprehensive legal and policy framework.
The advantages of energy crops production are:
· Additional land will be opened and new roads constructed in the biofuels producing areas, with spill over benefits on food crops;
· Water and irrigation facilities will be installed, which will also be available for food crops and drought mitigation;
· Seed and fertiliser companies will increase output;
· The additional markets, employment and income generated by biofuels will improve purchasing power of rural households; and
· Foreign exchange savings.
The 2005 SADC Secretariat “Feasibility Study for the Production and Use of Boifuels in the SADC Region” recommended the following:
· Establish an institutional framework to promote biofuels through a Biofuels Development Board or a similar autonomous organisation;
· Each member state to come up with a vision and mission on biofuels, which will be harmonised across the region;
· Formulate and adopt holistic biofuels friendly policies;
· Assure farmers of procurement of biofuels feedstocks at a minimum support price;
· Showcase pilot projects at the earliest to demonstrate technology and the workability of the biofuels programme.