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28/03/2014 00:00:00
by The Source
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FOREIGN Direct Investment inflows linked to Green Fuel project are expected to surpass the $1 billion mark over the next six years as the company concludes negotiations to comply with the country’s indigenization and empowerment regulations, Parliament heard on Thursday.

Green Fuel general manager Graeme Smith told the parliamentary committee on youth and indigenisation that the company has a four-phased growth plan which could see it supplying surplus power to the national grid in anticipation of increased mandatory threshold for ethanol blending, currently at 15 percent of ethanol.

Smith said Green Fuel, which currently employs 4,500 workers, has the potential to employ 30,000 directly. The company is producing between 250,000 to 300,000 litres per day, more than 20 percent in excess of the country’s fuel requirement.

To date, 5,000 vehicles have installed the flexifuel system for E85 fuel.

Green Fuel sold six million litres of ethanol to local fuel stations in December last year before uptake plunged to an average of two million in January and February.

“Phase four of (our expansion programme) will be developed between 2017 and 2020. Cane to be planted (will rise to) 45,000 hectares from the current 9,500 ha while 400 million litres of fuel will be produced annually,” Smith said.

The company will produce 86 megawatts from its ethanol plant, of which 80MW be sold to the national grid while its proposed $300 million Kondo Dam will supply a further 40MW, he said.

“We expect that E85 use would have increased and we anticipate having 50 percent of the petrol market. Employment levels will be around 30,000 people, direct foreign investment at this point in time will be $1 billion,” Smith added.

Asked whether the company had complied with empowerment laws, an official said talks are underway to form a joint venture with government.

In March 2009, the company had signed a build-operate-transfer arrangement with government before being forced into a 51/49 percent joint venture in compliance with the country’s indigenisation and empowerment regulations.

“We are in the process of negotiating a joint venture with the government of Zimbabwe. The transaction per se is that government will acquire 51 percent,” said Green Fuel legal advisor Derek Elliot.


Smith said the company’s environmental impact assessment process was costly, compared with regional peers.

“We are negotiating with the Environmental Management Agency on a payment plan for the review fee which is $826,000,” Smith said.

Kenya levies $27,000 while Mozambique charges $68,750 for a similar assessment report, Smith said.

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