Ethanol project: Zanu PF and Billy Rautenbach's poisoned chalice
CONTROVERSIAL business tycoon Billy Rautenbach has always effectively used his extensive political networks to secure and shape business deals in his favour, clinching multi-million dollar contracts in Zimbabwe’s diverse economic sectors ranging from mining, transport, farming and more recently bio-fuels.
Rautenbach’s US$600 million Chisumbanje ethanol plant, which employs about 5 000 people but closed eight months ago under circumstances shrouded in political controversy, is set to reopen after President Robert Mugabe apparently intervened by setting up a high-level ministerial committee to deal with the issue. Having worked closely during Zimbabwe’s military adventure into the DRC between 1998 and 2002, Rautenbach and Mugabe’s Zanu PF regime reportedly have close connections dating back many years prior to that. Their relationship appears symbiotic.
The ministerial team led by Deputy Prime Minister Arthur Mutambara is confident the Chisumbanje plant can be rescued after flying in Rautenbach’s private jet on two occasions within a week on a fact-finding mission to the Lowveld.
The visits exposed swelling political tensions, mudslinging and disunity in the wobbly coalition government after Energy and Power Development minister Elton Mangoma was singled out as sabotaging the project by refusing to gazette a statutory instrument compelling compulsory petrol blending with ethanol.
Mangoma was even threatened with physical harm by war veterans and Zanu PF supporters bussed in if the plant is shut down for good.
The first high profile casualty was former Arda CEO Eric Mvududu who was unceremoniously dismissed for allegedly refusing to sanction the deal in 2008.
However, Mangoma is adamant he will not be arm-twisted into supporting the creation of a fuel monopoly for private gain that displaces hundreds of peasant farmers from their plots.
“We have liberalised the fuel sector and there is nothing to stop the company from opening their own service stations to sell their product if it is competitive,” said Mangoma during the fact-finding mission. “This is a private initiative and therefore the sole responsibility of the investor to make it work.”
Mangoma is adamant he would not be party to a decision that deprives Zimbabweans their land and seeks to establish a monopoly on behalf of private investors.
National Constitutional Assembly leader Lovemore Madhuku, who was part of the mission and hails from Chipinge, said: “Arda only had 5 100 hectares which the company should have taken over in terms of their BOT (Build, Operate, Transfer) agreement, but Macdom (Rautenbach’s company) went and exceeded this by seizing an additional 8 000 hectares of land belonging to villagers.”
“Sixty families amounting to a total of 247 individuals have been forced to relocate to Mozambique after losing their land. All we are concerned about as a community is redress from the company on these issues. We are not even worried about mandatory blending because that is an issue for parliament and politicians,” he added.
Former Energy minister Elias Mudzuri, who authorised the project, agreed with Mangoma saying mandatory blending was never part of the deal. He said sanctioning of the project was based on Sadc Energy ministers’ Maputo meeting which recommended bio-fuels as the future.
“At cabinet level we never discussed and adopted mandatory blending of ethanol,” said Mudzuri. “Our view was that there would be many players involved and they would compete on the deregularised energy market.”
However, unfolding events show Rautenbach is poised to get what he wants — mandatory blending – and eventually control the country’s energy sector. Presidential Affairs minister Didymus Mutasa confirmed Rautenbach’s project would receive mandatory blending approval.
“We in government can fix this thing if we agree on mandatory blending,” said Mutasa. “We have no problems with mandatory blending since it once took place in this country.”
Arda chairman Basil Nyabadza concurred with Mutasa saying Rautenbach should be granted his demands since his project brings development and jobs to the Chipinge community and economy at large.
“It would be most unfortunate if we lose this opportunity to bring development,” said Nyabadza. “I appeal to the political leadership to make a decision soon.”
Mangoma and Agriculture minister Joseph Made question Rautenbach’s pricing model and structure, particularly since the company has readily-available and cheap raw materials and other inputs.
Rautenbach’s Green Fuels company sells a litre of ethanol for US$1 despite the fact that other producers the world over retail the commodity at around US$0,75 to US$0,90.
Although Rautenbach’s companies are paying Arda 8% management fees for use of their fields, the servicing of water bills to Zinwa is contentious.
Sources say Rautenbach is paying an average of US$10 000 a month for the irrigation of over 5 000 hectares of his cane crop although he told the ministerial delegation they are paying US$100 000 a month to Zinwa.
With elections looming and a potential 100 000 voters in Chipinge up for the taking, the political stakes could never be higher as the Chisumbanje project appears to be turning into a theatre for political battles with many undisclosed agendas and demands at play.
The situation is further complicated by claims of demands for bribes and kickbacks in the project which seems to be now becoming a poisoned chalice for Zimbabwe, particularly for the Lowveld communities directly affected by the contentious development and the politics and economics behind it.