Zimbabwe to introduce mandatory fuel blending
A cabinet taskforce put together to investigate the controversial Chisumbanje ethanol project on Wednesday announced that Zimbabwe will introduce mandatory blending of fuel after changes to the ownership structure.
Deputy Prime Minister Arthur Mutambara — who is leading the taskforce — said the government had resolved to change the ownership structure of Green Fuel from the initial Build-Operate-and-Transfer arrangement to a joint venture between Government through Arda and its investment partners.
Addressing journalists in Harare yesterday, Mutambara said there would be a gradual adoption of mandatory blending from E-5 to E-10 up E-20 by 2015. “The Cabinet decision to convert the project from a BOT to a JV must be upheld and implemented within the proposed timeline of two months.
“In doing the BOT conversion to JV due diligence and investment valuation, there is a need for rigour and creativity.
“There must be robust and creative valuation of the State’s asset contributions to the project, such as the land (40 000 ha), equipment, intellectual property, institutional memory, other state assets usable as security for loans, the partnership with Government as an asset and value enhancing instruments such as mandatory blending,” he said.
Mutambara said it was not possible for Government to introduce mandatory blending for one private company. He said mandatory blending could only be considered within the context of a JV.
“As a starting point, the mandatory blending should be at five percent level. This should be implemented immediately on the assumption that the conversion from the BOT to a JV is now irreversible.”
He said E-10 would continue as voluntary and optional until there was a mechanism to mitigate adverse impact on non-compatible vehicles. Mutambara said blending facilities needed to be developed quickly while car manufacturers and assemblers needed to start importing vehicles that take ethanol blends.
He said ethanol price should be cut in line with international prices. As such, DPM Mutambara said the actual price of ethanol should be pegged at 70 cents a litre. He, however, said they could start with 85 cents a litre to jump-start the company and to lure consumers.
Mutambara said there were social obligations relating to displaced farmers that Green Fuel should address. He said the company should compensate the farmers and include all stakeholders in its joint implementation committee.
“With regards to the social and community issues, the key suggestion is that all households that were displaced or mishandled must be compensated and resettled. Out of the total 1 754 households displaced from their communal lands in Chisumbanje and Chinyamukwakwa communal lands, only 516 have been resettled.
“The company should immediately relocate the outstanding 1 238 households who have not been relocated on irrigated land,” he said.
