THE Greenfuel ethanol project in Chisumbanje is not perfect and the project will meet the 51-49% indigenisation policy requirements with time, an official has said.
The project is a joint venture between Arda and Billy Rautenbach’s companies — Ratings and Macdom.
Agricultural Rural Development Authority (Arda) board chairman Basil Nyabadza said yesterday Finance minister Patrick Chinamasa had refused to take the stake in Greenfuel as it would bring more debt to Treasury.
Nyabadza said Chinamasa was in favour of foreign direct investment, but did not want to inherit debt from any company.
“We are concentrating too much on ownership yet production should be the issue where we need to produce. You cannot talk of ownership on day one because any investment does not pay on day one. It’s a process,” he said.
“If you take 51%, it means you are taking over the debt.”
A structure formulated during the inclusive government had proposed that government would get 51%, while the investor would own the remainder.
The proposal died when the inclusive government’s tenure ended last year.
Nyabadza gave the example of Ziscosteel which went in circles because of the indigenisation issues.
In 2010, Indian firm Essar Africa Holding was given the nod to take over Zisco in a deal worth $750 million.
The deal could not be consummated as government wanted control of the troubled steelmaker.
The ethanol project, which ushered in mandatory blending, has been in the eye of a storm amid revelations from motorists that blended fuel runs out faster compared to unleaded one. This means that the motorists have to incur an extra cost.
Mandatory blending started at E5 (5% ethanol and 95% unleaded) in August last year rising to E10. Currently the blending is now at E15 (15% ethanol and 85% unleaded).
Local vehicle assemblers have said that they would give warranties up to E10.
But promoters of the project say the country spends $6 million in fuel costs everyday and the use of ethanol will help the country to save on fuel costs.
Nyabadza said the price of fuel in Zimbabwe was lower compared to Malawi and Zambia after the introduction of mandatory blending.
He said the move by Greenfuel to produce E85 was commendable as it would benefit the country as a whole.
Flexfuel technical manager Ian McFadyean said Greenfuel has imported 7 000 E85 kits. So far, 5 000 have been fitted to various vehicles in the country.
This is a drop in the ocean considering that the vehicle population in the country is close to one million.