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South Africa: Investors await finalisation of bio fuels policy

Potential investors in Ethanol Africa's R1 billion maize-to-ethanol plant in Bothaville in the Free State are reluctant to commit to the project until South Africa finalises its policy environment on biofuels.
Ethanol Africa chief executive Johan Hoffman said yesterday: "We have firm offers [to invest], but it's dependent on the legislation.

"The policy delays will cause a lot of investors to withdraw and invest in other countries," he said. "We must be very careful."

Construction at the Bothaville plant was reported to have stopped in February, apparently due to changes to the execution structure of the project. Ethanol Africa denied reports of funding problems at the time.

In early 2005, when Ethanol Africa announced its intention to build eight plants in South Africa's Maize Belt, just a handful of bioethanol plants were planned around the world.

But there are now about 85 projects as the US, Europe and China have moved to establish targets for the use of biofuels in their transport industries. Biofuels are cleaner burning than petroleum-based fuels.

The Industrial Development Corporation (IDC), which is conducting feasibility studies into several ethanol projects in partnership with the Central Energy Fund, said it was "good" that South Africa was acting responsibly in developing its biofuels policy so as not to run into problems later.

Rian Coetzee, head of the IDC's food, beverage and agroindustry unit, did not believe the country had lost first-mover advantage by not yet finalising its policy.

"The intention is not to compete on an international open market … I actually believe we can learn from other experiences," Coetzee said.

South Africa's draft biofuels strategy aims to achieve a market penetration of biofuels of 4.5 percent of the petrol and diesel market by 2013 through mandatory blending.

The strategy was due to have gone to the cabinet for approval last month. Sandile Tyatya, the chief director of clean energy in the department of minerals and energy, said there had been a "slight hold-up" due to delays in briefing an interdepartmental committee on the outcome of consultations on the draft strategy.

Biofuels are a priority sector under the South African government's accelerated and shared growth initiative, or Asgisa, because of the potential to create jobs in the agricultural sector.

Additional information: Read the full story at Business Report
News date: 15/06/2007

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