ZIMBABWE – Government says it is in discussions with the country’s sole licensed ethanol producer, Green Fuel, over the company’s compliance with the country’s indigenisation laws.
Energy and Power Development deputy minister, Tsitsi Muzenda, recently told the National Assembly that government wanted to up the 10 percent stake currently held by State-run Agricultural Rural Development Authority (Arda) in the ethanol company to 51 percent.
The law compels all foreign-owned companies to cede majority shareholding to indigenous Zimbabweans.
“According to Statutory Instrument 17 of 2013, ethanol purchased for the purposes of mandatory blending shall be obtained from a licensed ethanol producer who is in a joint venture partnership with the Government of Zimbabwe.
“Green Fuel is the only licensed ethanol producer that meets the above mentioned requirement. The government through Arda, has a 10 percent shareholding… and is working to acquire 51 percent shareholding in line with the indigenisation and economic empowerment policy,” she said.
Last year, Green Fuel said it was negotiating with government to regularise its compliance with the country’s indigenisation laws despite the government’s meagre contribution of $37 million against the ethanol producer’s $332 million capital injection in the joint venture.
Government’s $37 million contribution was in the form of immovable assets and the value of land, while using the discounted cash flow method, Green Fuel has contributed $332 million dollars to the project.
Muzenda’s remarks came after Chiredzi West legislator, Darlington Chiwa, had questioned the logic behind government prioritising ethanol supplies for blending from Green Fuel, when the commodity was selling above $0,95 cents per litre, while other companies like Triangle sold the same commodity at 0,60 cents per litre.
“The purchase of ethanol for mandatory blending from Chisumbanje is in accordance with legislation, regardless of the availability of a cheaper commodity elsewhere,” Muzenda said.
Muzenda also argued that correct prices for ethanol are from Triangle were $0,78 cents per litre as mill gate prices because Triangle did not deliver the product while that of Green Fuel stood at $0,88 cents per litre mill gate price and $0,95 cents per litre delivered to Feruka or Msasa depots.
“These prices exclude $0,05 cents duty. In the past, when Green Fuel faced production challenges at the Chisumbanje plant, the ministry had to intervene and allowed the supply of ethanol from Triangle in these particular exceptional circumstances so as to avert a potential supply crisis,” she said.
Even then, in order to facilitate the purchase of the ethanol, Triangle was issued with a temporary licence to allow supply of ethanol for the mandatory blending market.
“Triangle has been asked to comply with the shareholding requirement of being in partnership with government and is yet to oblige. Government would therefore like more players in this area so as to boost competition,” said Muzenda.