Kenya sees $500m biofuels investment in 2 years

30th October 2008 By: cheryl reddy

Kenya expects $500-million worth of foreign investments in biofuel crop production over the next two years, a top government official said.

Romano Kiome, permanent secretary in the agriculture ministry, said five multinational firms from the United States, Japan, and Britain had applied to be considered in a government land-lease scheme.

"We actually expect over $500 million to be invested in biofuels in the country in the next one to two years," he said.

Crops such as jatropha, croton, sweet sorghum and sugar will be planted, he said, which will create jobs and eventually lower energy costs in east Africa's biggest economy.

"We are taking the production of biofuels in the country very seriously. We believe that if we link up with the private sector, we will benefit in terms of jobs creation and production of diesel," he told Reuters late on Wednesday.

"In the next three years, we are looking at biofuels making a contribution to the economy just like tea or coffee."

Kenya is a leading global exporter of black tea and its specialty coffee beans are sought after to blend those from other origins.

Under the arrangement, qualified firms like Japan's Biofuels International will lease land in various parts of the country.

"We will give them a lease for a given period of time depending on the investment. We shall look at the internal rates of return of those projects," said Kiome.

Some 500,000 acres have been earmarked for the companies and more land would be availed, he said.

Kiome estimated over 100 000 jobs would be created as a result of the initiative, including farmers who will be outgrowers.

The companies will sell the fuel locally or export it, Kiome said, although the government was still fine-tuning laws governing that area.

"We still have to finalise the biofuels policy with the ministry of energy so that we know how it will be marketed."