18 February 2013

Zimbabwe: Mandatory Blending Welcome, but . . .

AFTER the gazetting of regulations for mandatory blending of fuel last week, there appears to be no clear roadmap on how the policy will be implemented, with oil industry executives saying they were still waiting for directives from the regulatory authorities.

In general, many executives welcomed the blending as a positive national development to help reduce the country's fuel import bill, with the introduction of E5 blended fuel.

But some executives told Herald Business they felt there was need to clarify the roles each of the stakeholders would play.

For instance, Sakunda Energy managing director Mr Mberikwazvo Chitambo said there was need to first educate the importers, retailers and users of the product. He said the Zimbabwe Energy Regulatory Authority and the Ministry of Energy and Power Development should take the leading role in the awareness programme to ensure that the product is seamlessly introduced onto the market.

"We (Sakunda) are already blending E10, as are a few other industry players and we have been selling the product on some of our sites," he said. "Considering that the Statutory Instrument advocates for mandatory blending, we will have to invest (more money) into training and handling of the equipment in dispensing the product."

Mr Chitambo said there was need to look carefully at how the nation would blend the imported fuel and clarify whether this would be done by individual companies or collectively for the industry.

One of the biggest challenges of the mandatory blending initiative was that the only facility offering blending services was at the National Oil Infrastructure Company of Zimbabwe depot in Msasa.

He said it was not clear where the investment for compatible facilities to service the entire country would come from. Mr Chitambo said that considering that the regulations had been gazetted, there was need to take practical steps and effectively engage stakeholders to ensure that the desired objectives were met.

"The nation has the capacity to hold large quantities of unleaded petrol and ethanol, but what is not in place is the ability to blend. As far as we are aware, there is a blending facility at Msasa, run by one of the producers of ethanol. There is another facility in Harare held by another private company and there are no blending facilities outside Harare," he said.

"The question arises whether we will build other facilities there or will the blending be done in Harare and then distributed around the country?"

Comoil managing director Mr Lovemore Mazero said a lot still needed to be done in terms of the infrastructure and the logistics to ensure the mandatory blending process got underway.

"There is still a lot that needs to be done on the part of, not only the importers, but also on the retail side as well," he said. "One obviously needs to consider the risk of contamination on the forecourt as some of the storage tanks are old and E5 contamination with water is a major concern."

Mr Mazero said there was need to further engage stakeholders in view of the Government pronouncement that the Chisumbanje Ethanol Project would now be converted into a joint venture.

He said the sooner the issues surrounding the ownership and infrastructure development were resolved the better for crafting the way forward for the mandatory blending.

Zimbabwe imports up to 120 million litres of diesel and petrol every month. The mandatory blending regulations stipulate that 5 percent of all the petrol dispensed should be blended.

Energy and Power Development Minister Elton Mangoma has said that programme will take off as soon as joint venture issues are resolved. Green Fuel -- which owns the Chisumbanje Ethanol Plant -- is a joint venture between Arda, Macdom Investments and Rating.

Deputy Prime Minister Arthur Mutambara was last year tasked by Cabinet to resolve the problems at the Chisumbanje Ethanol Plant. He said it was not possible for Government to introduce mandatory blending for one private company and this could only be considered within the context of a joint venture.

The DPM said there would be a gradual adoption of mandatory blending from E5 to E10 up E20 by 2015.

Copyright © 2013 The Herald. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.