CHISUMBANJE-based ethanol producer Green Fuel has said it would not be able to comply with the country’s indigenisation laws because of loan obligations amounting to millions of dollars.
Speaking during a tour of its plant by Information, Media and Broadcasting Services minister Jonathan Moyo and Agriculture minister Joseph Made last week, Arda board Chairperson Basil Nyabadza said although they were obliged to comply with indigenisation laws, they had loans that had to be repaid.
Nyabadza said: “From inception (in 2009), when the initial funding came, the project (ethanol) was started from the clear understanding of build and repay the loans, that was the initial exercise. In 2007 the indigenisation law came into effect and we were asked to comply with the law’s recommendation of 51/49% shareholding.”
The project, which was started five years ago, has so far reportedly invested close to US$400 million and recently received US$260 million from unnamed investors to expand its water supply systems but there is controversy over the investment figures.
Green Fuels is a joint venture between Billy Rautenbach’s Macdom and Rating Investments and state-owned Arda (Agricultural and Rural Development Authority) at its estates in Chisumbanje, Manicaland.
Nyabadza said funders of the ethanol project include Americans, Brazilians and the British whom he said believed Zimbabwe has the capacity to grow, but was restricted by sanctions.
In March, Energy and Power Development minister Dzikamai Mavhaire said the company was awarded a licence to blend fuel on the understanding that it would comply with the Indigenisation Act that requires indigenous Zimbabweans to own at least 51% of any venture valued at US$500 000 or more.
According to Arda, government’s contribution to the project is US$36,7 million, inclusive of land, while Green Fuel’s contribution is valued at US$331,8 million.
It still requires another US$1 billion in the next 10 years to fully fund the project.