21 September 2012

Zimbabwe: Unblended Fuel Faces Ban

GOVERNMENT will ban the sale of unblended petrol in the next two months, Deputy Prime Minister Arthur Mutambara has said.

This follows Cabinet approval on Tuesday to introduce mandatory blending of fuel with ethanol, starting with E-5.

"All the fuel will be blended with ethanol. As a starting point, the mandatory blending should be at five percent level.

"People have a fear of the unknown. We used to have mandatory blending in the 1970s. CMED is currently using blend," he said.

DPM Mutambara said the mandatory use of E-5 would however, be a success if Government and Green Fuel agreed on negotiations to change ownership structure of the ethanol plant in Chisumbanje from a Build-Operate-and-Transfer arrangement to a Joint Venture. Cabinet directed that its recommendations on the conversion of Green Fuel from BOT to a JV and subsequent adoption of E-5 should be done in two months.

Following the adoption of mandatory blending, all petrol that comes into Zimbabwe would be blended with five percent ethanol before it is sold to the public. DPM Mutambara said mandatory blending was not new to Zimbabwe. He said the Ian Smith regime introduced it during the colonial era and it was even used after independence.

DPM Mutambara said before reaching the decision to introduce mandatory blending, they made wide consultations with stakeholders in the motoring industry. The stakeholders assured them that all car models had no problem in using E-5.

"E-5 is also the ideal starting point because none of the car manufacturers and sellers has a problem with that level of ethanol, whereas there were complaints about certain vehicles' compatibility with E-10." DPM Mutambara said the E-5 mandatory blending level would boost sales of ethanol from the 0,6 million litres to 2,3 million litres per day.

A stakeholder in the petroleum industry, who declined to be named, welcomed the decision to introduce mandatory blending. He said blend was fast becoming the fuel of choice the world over.

"The whole world is going in that direction and nearer home, South Africa has introduced mandatory blending.

"In some other countries they have even gone further and they are now blending diesel (with ethanol)," said the source.

Economists said Zimbabwe could save almost US$4 million every month with the introduction of E-5. They argued that Zimbabwe uses at least 1,6 million litres of petrol daily and with the introduction of E-5, US$4 million would be saved monthly. Arda chairman Mr Basil Nyabadza hailed Cabinet for coming up with a way forward on the Chisumbanje Ethanol Project.

"We must commend the President (Mugabe) for remaining steadfast on this entire exercise and Prime Minister Morgan Tsvangirai for leading his team to a national agenda.

"The details of the Cabinet report are what have to be pursued. Dialogue between DPM Mutambara and his team and other relevant stakeholders must be pursued immediately," he said.

The Chisumbanje Ethanol Plant stopped operations in February after exhausting its storage capacity of 10 million litres. There was political bickering and price-related issues that led to low sales of E-10. Government set up a Cabinet taskforce led by DPM Mutambara to address all issues that led to the closure of the plant with a view to ensuring immediate re-opening of the plant.

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