CHISUMBANJE-based ethanol producer Green Fuel says it requires US$20 million in fresh capital to expand operations in the event government approves an impending mandatory 20% ethanol blending on petrol.
Report by Taurai Mangudhla
Green Fuel general manager Graeme Smith told businessdigest during a tour of the US$600 million ethanol plant there were indications government would soon approve a 20% mandatory blending policy.
If that happens, Billy Rautenbach’s company would have to raise new capital to bankroll a “minor” expansion exercise. The Chisumbanje ethanol plant is the biggest in Africa.
He said the company has the human resource, equipment and enough cane at its disposal to support the 20% blending requirement.
“It’s basically what we have got and just expanding it and we are talking figures of around US$40 million,” Smith said.
“We only need to increase the number of mills. We will increase the number of boilers so that we increase steam and we will be able to put a second generator and extend the distillery,” he added, saying every vehicle in the country can use E20 (petrol blended with 20% ethanol) without any modification.
Green Fuel currently has capacity to produce enough ethanol to meet demand for 10% mandatory blending which it has been pushing for.
However, the company is awaiting legislation that compels fuel dealers to blend their petrol with 5% ethanol after government gave the nod to the arrangement in principle.
“As you reported yourselves they (cabinet) have agreed to the 5 % mandatory blending. However, that has not been implemented as yet, so we have stock that we are unable to move at the moment,” said Smith.
In the company’s view, approval of the proposed mandatory policy is dragging on account of “misconceptions” of viability of the product.
“In certain sectors of government they don’t have a clear understanding of the benefits of this to the country so the DPM (Deputy Prime Minister Authur Mutambara) is exposing this to the entire cabinet and to the inclusive government so they understand what the benefits of this plant are and what it can do for the country,” said Smith.