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Ethanol producer, Green Fuel, which commissioned a $600 million ethanol plant in Chisumbanje last year, recently suspended operations because the firm ran out of storage facilities as it was sitting on 10 million litres of the commodity.
About 5 000 workers at the Green Fuel plant in Chisumbanje risk losing their jobs unless the Government expedites moves to make it mandatory for fuel companies to blend petrol with ethanol.
Energy and Power Development Minister Elton Mangoma told Business Chronicle that Government was looking at the implications of coming up with a law that compels fuel dealers to blend petrol with ethanol
“An inter-ministerial committee has been set to look at the ethanol issue. The law will only be enacted after looking at what we want to achieve and when they (inter-ministerial committee) are satisfied, the law will be promulgated,” he said in a telephone interview.
Before the suspension of operations, the Chisumbanje plant had capacity to produce 160 million litres of ethanol annually against Zimbabwe’s annual fuel demand of 320 million litres.
An economist, Mr Takunda Mugaga, said suspension of operations at Green Fuel had multifaceted implications for the country.
He said suspension of production at Green Fuel would send negative signals about the country’s investment climate.
“It is critical to consider that the project is Africa’s biggest ethanol plant. By suspending operations, this will buttress the risk of doing business in Zimbabwe. And if told the story that such a project has ceased operations no one will have the appetite to invest in the country as investors will become nervous,” said Mr Mugaga.
He said the closure of the plant also meant that the workforce employed in the ethanol project was bound to lose jobs.
Mr Mugaga noted that the absence of biofuel on the market would mean Zimbabwe has to continue incurring high fuel import bills.
“Zimbabwe’s fuel import bill has always been high and because of the increased vehicle population in the country, it means the import bill will increase further,” he said.
Zimbabwe’s fuel import bill amounts to $2 billion per year.
The Zimbabwe National Chamber of Commerce immediate past president, Mr Trust Chikohora, said apart from relying on the promulgation of an Act that will compel fuel companies to blend petrol, it was critical for the responsible authorities to improve the marketing side of the commodity.
“Besides having the legislation, you will get more positive results by marketing the product better so that more people will use the ethanol.
“So far, there are concerns that have been raised with regards to the use of ethanol. For example, there are concerns that have been raised that if such fuel is used, it may damage the vehicle. Such concerns need to be addressed in order to give assurance to the public,” he said.
He said blended petrol would become attractive to the market if the price of the commodity was further reduced.
This, he said, would also help in moving sales volumes of ethanol.
Presently, blended petrol is relatively cheaper with a few service stations selling it at $1,36 per litre while petrol is pegged between $1,38 and $1,50 per litre in urban and rural areas.
The Chisumbanje plant was constructed on a Build Operate Transfer agreement signed between the Government and MacDom, which is the parent company for Green Fuel.
The plant was built using a Brazilian model.
Online Reporter