Hippo Valley gets ethanol producer licence

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GOVERNMENT has extended Hippo Valley Estates’ ethanol production licence as the company targets an annual output of 41 million litres, sources close to the developments have said.

Bernard Mpofu

Hippo, a unit of South Africa’s Tongaat Hullett, has resumed ethanol production following years of suspension due to declining prices.

Zimbabwe introduced mandatory blending of ethanol and unleaded petrol in a desperate bid to contain the country’s ballooning fuel bill. The country increased the blending threshold to E15 from E10 early last year.

In September, Hippo MD Sydney Mutsambiwa told journalists that the company was seeking clearance from authorities to become an independent ethanol producer.

Sources said the company had been producing through a temporary licence which expires in December while awaiting to finalise its paperwork.

“We do have challenges with respect of the licences to enter into the fuel ethanol market and we are busy engaging with the regulator to get the requisite authority,” he said.

Green Fuel, a joint venture between the government’s Agricultural and Rural Development Authority and businessman Billy Rautenbach’s Macdom and Rating Investments, is currently the country’s sole producer of ethanol for blending purposes and has in several instances failed to meet demand due to unfavourable weather conditions.

Hippo’s profit for the half-year ending September 2015 fell to US$2,2 million from US$9 million reported in prior comparative period weighed down by declining revenue.

At US$70,2 million, Hippo’s revenue was 15% lower compared to the same period last year, reflecting weak consumer spending.

“The results for the half-year ended 30 September 2015 were attained in an environment characterised by difficult trading conditions,” the company said. “The lower consumer spending as a consequence of low disposable incomes, compounded by tighter liquidity challenges and higher unemployment levels, coupled with the depressed sugar prices in the export markets, negatively impacted the half-year results.

“Government interventions aimed at protecting the sugar industry from illegal imports of sugar at dumped world market prices, together with the company’s continued cost reduction drive, helped in mitigating the full impact of these negative factors.”

The company said private farmers registered a 4% decrease in cane deliveries, collectively delivering 549 645 tonnes of cane over the six-month period to September 30 2015 (2014: 569 925t).

“The company’s cane deliveries over the same period amounted to 754 254t (2014: 723 158t), an increase of 4% due to an early start to the milling season compared to the previous season,” the company said. “Total cane deliveries to the mill amounted to 1 303 899t compared to 1 293 083t delivered in the same period last year, an increase of 1%.
Sugar production for the period to 30 September 2015 amounted to 157 877t compared to 167 425t for the same period last year, a decrease of 6%.”

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