Tinashe Makichi and Tendai Sahondo
Tongaat Hullet’s Zimbabwe unit, Hippo Valley Limited, has engaged Government for a licence to supply ethanol, as the country’s largest sugar cane producer has capacity to supply the domestic market.
Hippo Valley chief executive Mr Sydney Mutsambiwa told journalists after the company’s annual general meeting yesterday that the group is exploring ways to enter the ethanol fuel market but has been facing challenges with regards to licensing.
“We do have challenges in respect of licences to enter the ethanol fuel market but we are busy engaging authorities to get the requisite authority,” said Mr Mutsambiwa.
The company has an installed ethanol production capacity of 41 million litres and is producing sufficient quantities to supply the domestic market.
This comes after petrol imports in the seven months to July jumped 21 percent to 319,03 million litres due to low ethanol blending levels in the first half of the year, which forced the country to import more unleaded fuel.
Zimbabwe Energy Regulatory Authority chief executive Gloria Magombo said diesel imports also rose 9 percent to 582,48 million litres in comparison to the same period last year.
“Our unaudited consumption figures show that petrol supplied in the country for the first seven months of the year rose to 319,03 million litres, which was a 21 percent increase from the comparative period last year.
“On the other hand, diesel imports rose 9 percent in comparison to last year. The increase, especially in petrol, can be attributed to the low levels of fuel blending in the first half of the year,” she said.
Government slashed the mandatory blending ratio from 15 percent to 5 percent in December last year due to low sugarcane supplies from Green Fuel, which is the country’s sole supplier of ethanol
after the company faced challenges in harvesting cane.
The blending levels were revised upwards to 10 percent in May before being upped once more to the current 15 percent in July. Green Fuel says it is keen to reach the 20 percent ethanol blending level before the end of this year.
According to the Ministry of Energy and Power Development, Zimbabwe saves an average of $40 million in fuel imports annually due to ethanol blending.
However, the benefits of ethanol blending are yet to trickle down to consumers as the pump price has remained largely unchanged because of Green Fuel’s monopoly.
Tongaat’s sugar operations in Zimbabwe consist of Triangle and a 50,3 percent stake in Hippo Valley Estates, representing a combined installed sugar milling capacity of more than 640 000 tonnes. Hippo had stopped producing ethanol around the 1980s due to viability challenges.
On sugar operations, Mr Mutsambiwa said Hippo Valley Estates’ replanting programme continues to gain momentum with sugar production expected to progressively increase to installed capacity over the next four years.
“We now have 12 500 hectares of newly grown cane under the programme, and will go on until 15 000 hectares are fully replanted,” said Mr Mutsambiwa.