Pre-feasibility studies for three South African biofuel projects, each producing 100 million litres a year, show it will cost at least 5.1 billion rand to develop them, a minister said on Wednesday.
South Africa unveiled blending ratios for biofuels in 2007, but excluded the country’s staple food maize in a bid to ensure food security and rein in high prices.
However, farmers in Africa’s top maize producer have repeatedly called for a change in policy to allow maize in biofuels production so that energy costs could be lowered and profits improved.
“According to the Industrial Development Corp (IDC), the 300 million litres of bioethanol will require 3 plants producing about 100 million litres per annum,” Ebrahim Patel, Minister of Economic Development, said in a written reply to parliamentary questions.
“Each project will cost in the region of 1.7 billion rand in 2010 terms, (for) capex and working capital,” he said.
The projects are a sugar beet and grain sorghum-to-ethanol project in the Eastern Cape province, a sugarcane-to-ethanol project in Limpopo province and a similar scheme in the top sugar growing region of KwaZulu-Natal province.
Patel said state-owned development finance agency IDC was investing in ethanol, which needed to be blended with petrol before distribution and use in a normal car.
“The biofuel will therefore be sold to the oil majors or wholesalers who will blend and sell the required volumes,” Patel said.
The IDC plans to produce 300 million litres of biofuels a year by 2016, which equated to 75 percent of the country’s national biofuels production target of 400 million litres.