Call for mandatory ethanol blending

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The government should come up with concrete support measures aimed at nurturing the ethanol industry as a way of maximising economic benefits that come with localised fuel production.

Unleaded or E10 is the choice petrol users now have to make during each fuelling experience, following the commencement of ethanol production at Chisumbanje.

Whereas the price factor is bound to play an important role in the choice of fuel by consumers, economic analysts believe Zimbabweans have to know the statement they make with every litre of fuel they buy.

There is so much at stake. As a nation we have an opportunity to decide to grow our own industry by allowing the Middle East oil producers to share our markets with our own ethanol, or to continue shipping out millions of dollars every day by using products that are 100% foreign, said an analyst.

The government has to move in with a clear policy position to aid the growth of the ethanol sector. Without that, the whole sector would be vulnerable to cartel behaviour by Middle East fuel merchants.
Ethanol production volumes from the Chisumbanje plant currently stand at 220 000 litres a day.

Apart from giving oil companies the opportunity to create new fuel brands such as E10, the ethanol project in Chipinge represents Zimbabwes biggest investment commitment in more than five years.

Energy and Power Development permanent secretary Justin Mupamhanga said they were beginning to use blend and it is the governments desire for continued uptake for economic reasons.

Its too early to be conclusive, but people are picking up on the blend and requesting it at service stations, said Mupamhanga.

We are giving people choices, but our desire is for consumers to move to blending for economic reasons. Each time we purchase a product from outside its a dollar going out. If we use the money, locally it circulates in the economy.

Green Fuel spokesperson Lilian Muungani said the uptake of ethanol for blending has been slow, hence the need for a regulatory framework.

We currently have in stock over eight million litres of ethanol at storage facilities in Harare. Product uptake by fuel wholesalers has been very slow and we strongly feel the government has to move with mandatory blending in order to save jobs created as well as allow for cheaper, cleaner fuel for consumers, said Muungani.

Just under $300 million has been spent to date on the agricultural and construction phase and close to 5 000 jobs created.

Over and above that, the real impact has been in the stimulation of rural agriculture through community irrigation and the outgrower scheme which will ensure that individual farmers grow cane for supply to the mill.

According to figures from the Energy ministry, Zimbabwes daily petrol bill currently stands at $2 million, which translates to over two million dollars going out of the country every day.

But with ethanol, Zimbabwe has an opportunity to domesticate 10% of these cash revenues and effectively direct them into the local economy.

The government accorded the ethanol project National Project Status in recognition of its strategic importance in stimulating economic growth through fuel import substitution. A critical by-product from the plant is 18 megawatts of electricity to be fed into the national grid.

Mandatory blending means major fuel providers would ensure a percentage of the petroleum they sell is mixed with 10% of locally manufactured ethanol.

Analysts contend a mandatory blending policy would reduce the volumes of imported fossil fuels which translates to savings on the fuel import bill of more than $6 million a month and more importantly, results in improved energy security.

Without crude oil resources of its own, Zimbabwe relies wholly on imported fuel supplies. This places the domestic economy at risk as the instability in global oil prices becomes a major factor affecting industrial performance and commodity prices.

The current hikes in global crude oil prices have the negative impact of price increases reaching even Zimbabwean rural areas where the capacity to generate the US dollar is close to zero.

The decade-long economic downturn has had the continual effect of undermining rural commerce. Many retail operators in rural Zimbabwe closed shop resulting in massive rural disinvestment in reality of a market that had no disposable income.

A viable bio-fuel industry would have the immediate impact of reviving rural commerce as significant revenues from fuel savings would be channelled into the local economy through employment, contract sugarcane growing by outgrowers and downstream industrial effect resulting from the supply chain.

Economist John Robertson said the move was positive as the country is now producing 20% of its fuel requirements, but there were costs incurred when the ethanol plant was established.

We could be making money from exporting sugar because sugar prices are high on the international market instead of saving money on ethanol, Robertson said.