ENERGY: Sugar Industry Diversifying Into Fuel and Power
Recent Gauteng Business News
- Integrated Real-time Information An Enabler Of Enhanced Public Transport Service Delivery
- Virtualisation Brought to the Mac Market
- AA Fuel Price Outlook: Oil-Rand-Dollar See-Saw Continues
- Liquidation Statistics reflect Tough Operating Conditions
- Endeavor Entrepreneurs Celebrate their Success at the JSE
There are many underlying reasons why the sugar industry in Sub-Saharan Africa (SSA) is diversifying into fuel and electrical power. Fuel from sugarcane is generated through the production of bio-ethanol, while power generation emanates from burning sugarcane residues, otherwise called bagasse, writes Chemicals Materials and Food Research Analyst Richard Orendo Smith at Frost and Sullivan, global growth consulting firm.
In Sierra Leone, a similar project is being initiated by Addax and Oryx Group (Makeni Ethanol and Power project). The investment value for the project is $340 million and the project should come on stream by the end of 2013. The Makeni Ethanol and Power project will have 10,000 ha of land irrigated and mechanised. The project is expected to produce 1 million tonnes of sugarcane per annum, 93,000 MT of ethanol and generate power of 15 MW for the national grid. In terms of project funding, Makeni Ethanol and Power project will be funded by entities such as Industrial Development Corporation (IDC), the African Development Fund (AfDB), Swedfund and Emerging Africa Infrastructure Fund, while the Angolan project financing will be sourced initially from the Angola Forment Bank (AFB) and Bank Espirito Santo (BESA), including the Brazilians state development bank (BNDES).
EU countries have passed a law that will come into effect by 2020, which compels companies producing and marketing fuel to mix refined crude oil with at least 10% of bio-ethanol. The main objective of this law is to mitigate the effect Green house gas emission on the environment notes Frost and Sullivan. Consequently, most of the bio-ethanol produced through these projects is earmarked for the EU market.
In this context, it is important to emphasise that Africa has an estimated 60% of the total available arable land globally. In addition, its climate is perfect for sugarcane cultivation, especially under tropical or semi-tropical climatic conditions in places such as West, Central, East and part of Southern Africa. Frost and Sullivan concludes that investments for projects aimed at producing ethanol from sugarcane for fuel consumption, especially as the current price of fossil oil makes such projects economically very profitable, will most likely increase in Africa in the medium to long term period.
Business News Sector Tags: Energy|