Cape Town - South Africa plans to invest R2bn to build an
ethanol plant and help a nascent biofuels sector that could reduce the
country’s reliance on imported fuel, an industry player said on Monday.
South Africa imports about 60% of its crude oil needs and became a net
importer of finished petroleum products several years ago.
In recent months, the country has been hit by fuel
shortages due to planned and unplanned shutdowns at four of its six refineries.
Roak Crew, chief executive at Sugar Beet RSA, which is
implementing the project in collaboration with the government, said the plant
could start operating in 2014. It would initially produce some 90 million
litres of fuel a year as sugar beet and grain sorghum are converted into
ethanol.
Output at the plant to be located in the impoverished
Eastern Cape province could eventually be raised to 200 million litres a year,
he said, but concerns among refiners regarding fuel blending and feedstock
could hamper development.
“At the moment there is no requirement by the fossil fuel
producers to blend biofuels into their products, and without this happening,
the industry will not be sustainable,” Crew told Reuters.
The plant would provide a major boost to the development of
South Africa’s biofuels industry, which has been held back by an inadequate
regulatory regime and concerns that biofuels would hurt food security and
impact food prices.
The plant would be funded by the government, which has a
target of having biofuels annually contribute 2% (about 400 million litres) to
liquid fuels consumption by 2013.
Agriculture Minister Tina Joemat-Pettersson said the state
wanted to ensure small-scale farmers are involved in sugar beet planting to
boost farming in areas neglected during apartheid.
The construction of the plant is likely to start later this
year, she said, adding that exports into Africa were an option.
“We have already done the pilot, so this now is beyond the
pilot stage. We are quite confident that this is going to be a successful
project,” she said recently.
Canola, sunflower and soya are feedstock for biodiesel,
while sugarcane and sugar beet are feedstock for ethanol.
Illovo Sugar [JSE:ILV], a unit of Associated
British Foods, said it may opt to invest in biofuels from sugarcane if it made
business sense.
The South African Petroleum Industry Association (Sapia),
which represents refiners including Royal Dutch Shell, BP, Chevron, Total and
Sasol [JSE:SOL], said the government needs to ensure that the push for biofuels
does not compromise the availability of fuel supplies.
“The regulated pricing mechanism needs to be determined.
What guarantees can be given that sufficient stocks of biofuels will be made
available to provide for the mandatory blend requirements?” said Sapia
head Avhapfani Tshifularo.
The department of energy plans to finalise the
mandatory blending regulations by the end of 2012.