Shutdown cost Green Fuel millions

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Ethanol-producing firm Green Fuels says it is losing at least $150 000 in potential revenue daily since it stopped production at its Chisumbanje plant last month.

Production of ethanol at the $600 million plant stopped after it ran out of storage space. It is currently holding onto 10 million litres of ethanol.
Green Fuel has been urging government to put in place legislation that would make it mandatory for fuel companies to blend petrol thereby saving the country millions in imports.

Company spokesperson Lilian Muungani said Green Fuel was in constant communication with the government and was hopeful a solution could be found soon given the National Project Status accorded to the ethanol venture.

“Thousands of our staff are on leave because the factory has been shut down. However, we may not be able to continue paying them if production remains suspended,” said Muungani. “We are losing up to 150 000 liters per day, which equates to almost $150 000 in revenue.”

Over 20 countries with access to ethanol through home production or imports have implemented mandatory blends of up to 20%. Muungani said it had been proven that a blend ratio of up to 20% is considered to be safe.

“Government has to move in with mandatory blending to significantly reduce the country’s fuel import bill, domesticate cash revenues and, most importantly, to save the thousands of jobs created in what was previously the least economically viable district within the country,” she said.

The Green Fuel spokesperson said distribution of E10 had been negatively affected by the logistical reality that most of the fuel retail outlets were designed for only two product lines in terms of storage — diesel and unleaded.

“Stocking E10 invites on them a whole list of expenses to put up additional storage facilities, but the financial capacity among our retailers is very limited. With mandatory blending, there would be no need for additional storage facilities,” she said.

Going forward, Muungani said Green Fuel planned to meet 85% of the country’s fuel requirements by introducing E85 – which is a blend of 85% ethanol and 15 % unleaded — and would require an easy-to-fit conversion kit. In 2011, the country spent over $1 billion in fuel imports.

“This development will effectively translate to a positive performance on the nation’s balance of trade while presenting huge savings for consumers on fuel,” said Muungani. “However, a supportive policy framework is key to the realisation of these economic positives.”