18 October 2013

Zimbabwe: Fuel Blending - More Questions Than Answers

Photo: Capital FM
Filling up the tank.

BUSINESSMAN Billy Rautenbach must be ecstatic after his four-year lobby for the adoption of mandatory blending of fuel not only became a reality, but registered more success this week from just 5 to 10% mandatory blending of ethanol with unleaded petrol.

Government has further indicated it would increase the mandatory blending to 15% next month and to 20% by March 2014.

Despite winning over senior Zanu PF party's officials including Vice-President Joice Mujuru and national secretary for administration Didymus Mutasa, Rautenbach's U.S$600 million ethanol investment at Chisumbanje almost collapsed due to market resistance to the blend.

He was even forced to halt operations last year, but a combination of sustained political pressure and his pledge to fund the 2013/2014 agricultural season finally broke President Robert Mugabe's resolute opposition to the project.

Mugabe had opposed the proposal for years, insisting government could not enact a law that benefits one person (an apparent reference to Rautenbach) and was supported in his stance by his then coalition government partners, the two MDC parties who demanded an investigation into the deal and compatibility of common cars in Zimbabwe with the fuel.

While Rautenbach may be celebrating a potentially lucrative business venture, many questions still remain unanswered about whether mandatory blending is the best way to go for Zimbabwe.

What are the overall economic and social benefits of imposing mandatory blending? Is the move not creating a monopoly in the fuel sector where a whole country could be held to ransom by an individual or a single company? Should it not be a matter of choice for motorists to decide which type of fuel to use for their cars?

Addressing an inter-ministerial taskforce headed by former deputy prime minister Arthur Mutambara at the Chisumbanje Ethanol Plant in June last year, Rautenbach claimed that apart from significant savings from a reduced fuel import bill, his project would employ more than 4 000 workers, generate 18 megawatts of electricity, enough to power the entire Manicaland province and carbon dioxide by-products will be used by beverage and fertiliser manufacturers, among other benefits.

He also spoke about increased agricultural productivity and greater food security that will accrue to the local community in the Chisumbanje area which will benefit as out-growers of sugarcane as well as from irrigation provided by his company.

Deputy Energy minister Munacho Mutezo said on Monday that it "will reduce environmental pollution, hence mitigate climate change, through the development and use of cleaner fuels".

But even with this rosy picture about the supposed benefits amplified by the Zimbabwe Energy Regulatory Authority's (Zera) repeated assurances that ethanol is safe for all vehicle types, the motoring public remains sceptical.

During Monday's Zera petroleum workshop on E10 mandatory blending, Mutezo said: "It is a fact that E10 is a tried, tested and accepted blend in Zimbabwe."

Even as Mutezo was announcing that "government has not received any material complaints against the (ethanol) product by the motoring public", studies around the world have exposed serious shortcomings, suggesting that the public will soon be beating a path to Mutezo and Energy minister Dzikamai Mavhaire's door to raise concerns.

According to the American fuel testers' website (http://www.fuel-testers.com), "many engines manufactured prior to the late 1990s were not designed for E10 fuels".

"All manufacturers currently prohibit use of fuel containing over 10% ethanol and most warranties clearly state that repairs will not be covered when fuel in tank contains over 10% of ethanol," the website further states.

Some of the general problems likely to result from the use of ethanol blends include corrosion of metal parts, deterioration of plastic parts, damage of internal parts, starting and operating difficulties, water absorption, wear and damage of internal engine parts, damage or premature disintegration of the fuel pump, clogging and plugging of fuel injectors and unsuitable ignition timing resulting in ignition failure.

According to the website, drivability issues related to E10 include "engine performance problems, often simply due to lower energy of ethanol blends, hard starting and operating difficulty, hesitation and lack of acceleration and stalling, especially at low speeds".

Ferrari, Hyundai, Kia, Porsche, Volkswagen and Audi are some of the car manufacturers that have expressed reservations about E10 and issued warnings against its use, saying the cars may develop drivability problems.

Motorcycle makers Ducati, Harley Davidson and Suzuki have done likewise.

However, there are some models like BMW, Honda, Kawasaki, Polaris and Yamaha which have no problems with ethanol blends.

In Zimbabwe, misgivings abound with Toyota Zimbabwe principal dealer Simplicio Shamba saying problems are likely to start when government moves to E20 because the older vehicles are not designed to take E20.

"We have written to government advising them that most of our vehicles are compatible up to E10 blended fuel," said Shamba in an interview with the Zimbabwe Independent on Tuesday.

"Above E10, older vehicles are likely to have performance problems relating to heat vapouring. The cars will not be able to cover the same distance they were able to cover with the unleaded fuel," said Shamba.

He said the older vehicles are those that still use the carburettor system instead of the fuel-injection system. At the time of writing, Zera and Green Fuel were still to respond to questions that were e-mailed to them on Monday.

Questions Zera was given include names of companies given licences to carry out the blending, whether the country has the capacity to meet daily requirements, systems put in place to ensure compliance, why Zimbabwe has decided to make the fuel mandatory when in some countries people are given a pump choice, whether Zera has undertaken a study to check compatibility of common cars in the country, engine damage and performance related issues.

Green Fuel did not respond to questions they said would be covered during a field tour of the plant next week. Questions also include the company's shareholding structure, pricing system, why it is pushing for a higher blending and its comment on suggestions that it is holding government to ransom by tying financial assistance to E20 mandatory blending.

However, an insider who spoke on condition of anonymity said some of the criticisms were unfounded and if entertained would derail what will be a significant economic investment.

"Green Fuel is not the only player in ethanol production which also has the Hippo valley and Triangle companies," said the insider, adding that any attempts to suggest Green Fuel has a monopoly are "malicious".

Green Fuel official Stanley Law said this week E10 would be compatible to any type or model of a car assembled after 1990.

He was quoted by state broadcaster, ZBC, saying if the vehicle was build before 1990, a convertor should be installed on the vehicle to facilitate compatibility with the new fuel.

Without stating where people could get the converter, Law said it was being given for free at the moment, but would in the long-term be sold for US$50 or less.

Perceptions that mandatory blending is being enforced to benefit Green Fuel have been fuelled by lack of information about the company's shareholding structure. Neither government nor Green Fuel has to date publicly stated the ownership structure of this company despite Mugabe setting up an inter-ministerial committee that looked into turning the company into a joint venture with Arda.

"There is nothing sinister with the adoption of E10 or even E20 because countries like Brazil and Thailand are already on E25 and E20 respectively. Zimbabwe must be wary of falsehoods being peddled by multi-national fuel companies who have vested interests as they stand to lose from the adoption of mandatory blending."

Government, Green Fuel and Zera all maintain Zimbabwe stands poised on the threshold of socio-economic growth premised on mandatory blending and the resultant industrial linkages. But so many questions remain unanswered and in this respect, government and Zera have much to do in way of public awareness to allay fears about the efficacy of the ethanol blend and other issues.

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