The biofuels industry was the underdog of the renewable energy sector, with little or no support from government and government policymakers, Southern African Biofuels Association (Saba) president Andrew Makenete asserted last week.

Speaking at the fourth African Biofuels conference, in Midrand, Makenete highlighted that few government officials or policymakers ever attended biofuels conferences, unlike the other renewable energy sectors.

He questioned how the industry could have policy and laws written to promote the biofuels sector, if policymakers did not consult with the sector.

The policy framework in South Africa was not adequate, said Makenete, noting that it acted as a disincentive rather than an incentive for potential investors.

He added that the sector needed champions with clout and power to put the industry at the top of the political agenda.

Deloitte senior manager Kevin Baart agreed that the sector needed assistance from government so that participants could redefine the terms of competing with other sector participants and in shaping a business strategy.

Baart noted that the investment potential in the industry was still there and that there were still positive acquisition markets and joint-venture markets.

Further, global biofuels production was set to double by 2012.

However, a lower oil price, which had dropped to about $50/bl from a high of above $140/bl last year, and the credit crunch, were leading to a shift in investor attitude away from biofuels, said Baart.

Both Makenete and Baart questioned what impact PetroSA’s plans to build a 400 000-bl/d oil refinery at Coega would mean for the biofuels industry, saying that there would be no demand for biofuels in the Southern African region when the refinery is operational.

This would “squash biofuels development” in the region, commented Makanete.

The new oil refinery, dubbed Mthombo, is expected to start production by 2014, and will cost the country around $11-million

SA firm plans R250m biodiesel plant

South African biodiesel production company First In Spec BioDiesel was planning to build a R250-million biodiesel plant that would convert waste vegetable oil into biodiesel, a company official said last week.

MD Louis Nyiri told delegates at the African Biofuels conference, in Midrand, on Monday, that it was planning to build a plant to produce 50-million litres a year of biodiesel.

The company had already signed letters of intent for about 15-million litres a year of feedstock from companies abroad, as it would be cheaper to import the feedstock from foreign countries.

The plant would require between three-million and four-million litres a month of feedstock, he said.

Nyiri noted that the company could bring R50-million in equity to the table and was looking to acquire funding for the rest of the project costs.

He added that if biofuels project developers had a good plan, they stood a good chance of obtaining funding, even in economically difficult times. Bringing in more parties to share the debt would also likely make it easier to obtain financing, said Nyiri.

ANDREW MAKANETE

PetraSA's planned Coega refinery would squash biofuels development (EN March 21, 2008, page 37)

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