South Africa Investing in Ethanol Producer
19 August 2005
Independent Online. The South African Energy Development Corporation (EDC), a division of the state-owned Central Energy Fund, is in talks to buy 30% of maize-to-fuel company Ethanol Africa in a deal potentially worth R180 million (US$27.5 million).
According to the report, the investment signals a possible shift in the government’s biofuels policy, which currently does not mandate the blending of ethanol into gasoline and of biodiesel into diesel.
Ethanol Africa, formed earlier in the year by a group of farmers looking for outlets for the large maize surplus and relief from low market prices, is planning to start ethanol production in 2007.
The Central Energy Fund, whose mandate includes energy-saving interventions, recently completed an in-depth study on bioethanol and would meet the department of minerals and energy soon to discuss its findings, [EDC general manager Manny Singh] said.
The fund believed ethanol was a “very good intervention” given the challenges faced by South African farmers struggling with low prices and a 6 million ton maize surplus, Singh said. Ethanol also provided a good source of octane in petrol.
The staged phase-out of leaded fuels from South Africa which began in 2002 must be complete by 1 Jan 2006. There is some concern that the banning of leaded fuels from 2006 could lead to shortages of high-octane gasoline as lead has traditionally been used to boost octane levels.Ethanol Africa eventually plans to construct eight ethanol plants. Construction on the first in Bothaville is due to start later this year.
[Ethanol Africa director] Haasbroek said the company hoped its ethanol production would be taken up by local oil companies for blending into fuel, but in the absence of a clear policy from the government, the ethanol could be exported to Europe and Japan.
The EDC is reportedly also exploring the conversion of sugar into ethanol, and has signed a confidential agreement with a sugar company to investigate a number of initiatives.
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