Green Fuel, a 70-30 joint venture between private investors led by Billy Rautenbach on the one hand and government on the other, appeared to have been a panacea not only to the country’s fuel challenges when it was launched two years ago but also to the economy as a whole, starting with the Lowveld in which the project is sited. What with the 5000-odd people that would be directly and indirectly employed by the project.
What with 500 or so farmers whose business boosted by the project’s demand for at least 50 000 hectares to be put under sugar cane. And consider the 120 megawatts that would be generated from burning bagasse, the waste from cane once its sap has been extracted.
This was said to be enough to power the whole of the Manicaland province in which Chisumbanje is located. And what of the multiplier effect of all these activities? To cap it all, US$600 million was to be spent in the venture, which would fully become government-owned after 20 years under a Build, Operate and Transfer (BOT) system.
In terms of its core business, the plant could produce up to 2,8 million litres of fuel daily, nearly three times Zimbabwe’ daily requirements, which fuel had the further advantage of being environmentally-friendly, hence the word Green in Green Fuels. The surplus, of course would be exported, earning the country the ever-scarce foreign currency. Could Zimbabwe, which was coming out of economic doldrums, ask for more?
However, the ethanol plant is threatening yet another white elephant.
Elsewhere in this issue, we are told that government has thrown out Green Fuel’s proposals for the compulsory blending of the ethanol it produces with ordinary petrol. Green Fuel general manager Graeme Smith was this week quoted as saying the company was lobbying government to put in place legislation to compel all oil companies to blend their fuel with locally-produced ethanol.
Such an approach, though, smacks of the very authoritarianism that has become an anathema in Zimbabwe through acts such as Posa, Aippa, land reform laws and indigenisation acts. Energy minister Elton Mangoma has a point in indicating that that Parliament should not enact laws to help individual companies make a profit. That would set a bad precedent.
However, it is very important for the nation to support the Green Fuel initiative, given its economic advantages outlined above. After all, this is not the first time Zimbabwe has resorted to blending ethanol with imported petroleum. During the sanctions busting era of UDI an ethanol plant was set up and this received a new lease of life in 1983 following the fuel crisis of 1982.
A blend of ethanol from that plant and petrol is what Zimbabwe had been using ever since. What has been labelled as “blend” at all service stations is in fact the very same type of product that Green Fuel is producing. It’s only at the height of fuel shortages during the hyperinflationary era that the majority of Zimbabweans began using unleaded petrol, as shortages implied that deliveries had to be made immediately, obviating the need for blending. Prior to that, unleaded petrol had been used only by the elite as it was more expensive.
It appears this is where Green Fuel has failed. Its product has been priced in such a way that it is uncompetitive. Given the small price differential (US6-8 cents per litre) between Green Fuel’s E10 (the old blend) and the longer lasting unleaded petrol, the average motorist will opt for unleaded.
In Brazil, the largest producer of ethanol in the world, ethanol producers get subsidies from government since they are an entire industry and not an individual company. Zimbabwe cannot afford that. Green Fuels has to come out in the open about its cost structure so that viable prices can be charged.
But above all, the project must be viewed as a national economic venture and not a theatre for politicians to settle scores and indulge inself aggrandisements.In the end, national interest — not individual agendas — must prevail.