|‘E10 expensive compared to international prices’|
|Saturday, 19 May 2012 18:20|
The Zimbabwe Energy Council, which is a local chapter of the World Energy Council, an organisation that brings together experts from around the world to discuss ways of building energy sources, last week hosted a discussion forum to unpack the Zimbabwe Energy Policy. Although the dialogue was supposed to focus on the future of bio-fuels in Zimbabwe, it ended up solely being a debate on the Chisumbanje ethanol project. Minister of Energy and Power Development Mr Elton Mangoma did not pull any punches and clearly spelt out his position on the ethanol project. The Sunday Mail Business Editor DARLINGTON MUSARURWA took time to reproduce excerpts of the transcript of the Question and Answer session.
We felt that this was important because our overall strategy is to be able to say that in this country we have huge storage. For example, I think the storage we have in Zimbabwe — just under Government control; I am not talking about private storage — is over 500 million litres, which is like three times what we have at Beira. And my hope was always to increase the use of that storage and to bring the trade of fuel from Beira to Harare so that the regional countries would then buy from Harare. Here we are talking of Malawi, Zambia, northern parts of Botswana and the Democratic Republic of Congo, and already these things are happening. So, it becomes necessary, if one has got to look at it, to play the facilitative role and with it the use of the pipeline.
Now, to answer your question, I would have asked the players why they increased their prices. But I would say this is in response, generally, to the price increase of crude oil around the world, and this is being caused — and I am putting in my own guess here — that the tension between Iran, which is a major supplier, and other countries is leading to the jitters where people are having to increase the price. I was listening to Bloomberg the other day and they were saying Iraq is now producing a lot more, but also that the production currently is more than the consumption; therefore, we are more likely to see a dip in the near future. I don’t want to speculate about that but, certainly, I think that the price of fuel internationally has gone up and that is the response to it.
Q: But when it comes to the issue of strategic reserves for fuel, where are we now and have we started to accumulate something?
Q: Does Zimbabwe have a policy on bio-fuels?
That is the only application that we have had to license. We can even license E100, but it is up to the market to decide what it is that they need. The current discourse, however, is about whether we should make this (blending) mandatory or not. Certainly, Zimbabwe has no policy of making E10 mandatory at this stage and, therefore, it’s one of those issues. But we don’t have to make it mandatory; in many countries where bio-fuels are, they are not mandatory, but they are available in the market. It is a discussion that requires wider consultation if we are going to have a major step like that. It cannot be dictatorship of a government. Certainly, for some people of my ilk, I actually hate dictatorships. That’s why I have indicated that we liberalise the fuel market. Otherwise, I would have taken the pleasure of announcing fuel prices every month or every week, but I don’t think that is my business.
Q: Brazil invested a lot of subsidies in supporting its own bio-fuels industry; how do you think we will support the industry in Zimbabwe?
Brazil. Even when they started the project, they didn’t force people to get into E10, because it’s a confidence thing. People must then come to learn what it is that they want. If they had done that, they might even have ended up with a riot. They worked through and made sure that people were given the flexibility that they want. Freedom and liberty cannot be taken from anyone by a government — any government — and, therefore, we need to persuade the people on the basis of what they perceive to be the benefit. Coming to the issue of our current situation, it is common knowledge that as a government we are broke. And then for someone who is broke to start talking about subsidising anyone, you know it’s not going to work. I will never allow us to subsidise vehicle owners when kids are not going to school, when hospitals have no medicines.
Where are our priorities? I think that we have to be able to put this thing into perspective and say unless things have been properly put together there will be large policy failures. We are still struggling right now. GMB wants a subsidy, Air Zimbabwe wants a subsidy and anybody who cannot run their parastatal wants a subsidy. Where is that money going to come from? So, if we are to have something that is clearly a Government and private sector initiative, it must be thought through, worked out so that all the necessary components are put into perspective — not necessarily to delay anything but to make sure that the critical things are taken into account. If you don’t do that, it will not work.
And I just look at the current issue of E10. There are many lies that are being peddled. You will not get a policy through lies. It will not work. The first thing is that E10 is very expensive here compared to international prices. Zimbabwe actually has a very good climate for growing of sugarcane. In most places you can have sugarcane maturing in less than 12 months; in others, it requires 15 or so months to mature. So, the growing of sugarcane and its price in Zimbabwe should actually be lower than anywhere else in the world.
That would translate to a price, which should then entice people. There are many other factors.
Q: You are aware that regionally most of the countries are going into mandatory blending of ethanol and we are producing ethanol and you are saying the only policy pronouncement you can make is for Green Fuel to export that ethanol. Are we doing our customers a favour by saying that the ethanol that we are producing should go into other markets instead of benefiting Zimbabweans?
I have said, and I repeat, that I don’t know where this project came from because up to now in Government we don’t know where it came from. Some say it came from the Minister of Agriculture, but in Cabinet he denies that. I came from the Ministry of Economic Planning and Investment Promotion, and I don’t know anything about it. You can tell us which ministry authorised this project. I have said they can export. As for the issue of jobs, blackmail doesn’t work and blackmail will not work. If they want, they can export and those jobs will still be there.
Many other business entities are folding even as we speak and many jobs have been lost over the past. I think if people want to be in business, and I speak with authority because I am a businessman — I am more a businessman that a politician — you have to do the things that will make your business survive. I have got zero capital on politics. I can have it written off and I don’t care because I will survive as a businessperson.
Can you imagine everyday you are opening the paper and actually everybody says its Mangoma’s fault and yet I am at pains here to say that we have set an inter-ministerial committee as Cabinet to look at all these factors.