BusinessSectorsZimbabwe to construct second pipeline, ethanol project questioned


Posted on Wednesday, 22 August 2012 15:56

Zimbabwe to construct second pipeline, ethanol project questioned

By Janet Shoko

Map of ZimbabweZimbabwe plans to build a second oil pipeline, linking it with Mozambique in a bid to boost capacity at the current Feruka pipeline.

The project, set to commerce early 2013, comes as a US$600 million ethanol project teeters on the brink of collapse, after struggling to secure government backing.


The planned pipeline will stretch from Savana area, which in the eastern parts of Mozambique and located 50 km north of Beira.

It is expected that the new pipeline will have a capacity of carrying 10 million litres of fuel per day.

Energy and Power Development Minister, Elton Mangoma says the coalition government is putting together a consortium with the Mozambican government and private players for the project.

Zimbabwe currently imports fuel through the 287 kilometre long Feruka pipeline stretching, from Beira in Mozambique to the Feruka Oil Refinery outside Mutare.

As the new pipeline is on the cards, the government has expressed frustration with the ethanol bled project, with a cabinet committee dealing with the issue demanding answers on why the product costs more than US$1 while in other countries prices average around US$0.75.

The project, known as Green Fuel, has raised eyebrows, as Mangoma says the firm running the project has not justified why all motorists in the country should be forced to use its ethanol petrol blend.

Green Fuel, the company behind the project, has struggled to convince the government to introduce mandatory blending of petrol and ethanol leaving the future of the project in doubt with production at plant suspended.

The company says it is holding onto 10 million litres of ethanol and had to cease production after running out of storage capacity.

The company's spokesperson, however, says the pricing structure has been explained to the government, adding that ethanol was cheaper in other countries because of heavy state subsidies.

"The price quoted is Brazilian, where there is a 47 cents subsidy by the Brazilian government. They have a 30 year ethanol industry and produce 30 billion litres a year, with a blend mandate of 25%," the spokesperson said.

"The cost of ethanol in Malawi is a $1.36 and they have a mandatory blending policy of between 10 and 20 percent. Even at a dollar per litre, ethanol is still cheaper than importing dirty fuel from the Arab States".

Finance Minister Tendai Biti recently queried the nature of the deal between Green Fuel and the state-run agricultural parastatal, ARDA.

Biti described the deal as "murky", claiming Green Fuel had gained control to vast tracks of land for its sugarcane estates without a paying a penny.

"That estate is now about 4 percent of Zimbabwe. That land was not bought, it was taken for free," he said.

"So the government of Zimbabwe is saying - what is the ownership structure now because you have taken all this land which you have not paid for. You have put US$200 million or US$300 million, but that is not equal to 4 percent of Zimbabwe. That must be clarified."

Last Updated on Wednesday, 22 August 2012 16:36

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