|Gvt resolves ethanol project impasse|
|Tuesday, 12 June 2012 19:13|
THE Government is now the major shareholder in the contentious Chisumbanje Ethanol Project after Cabinet resolved to regularise its ownership structure in tandem with the Indeginisation and Empowerment Act, which changed it from a Build-Operate-and-Transfer agreement to a proper joint venture.
Arda board chairman, Mr Basil Nyabadza, refused to comment over the latest developments and referred the matter to the Minister of Agriculture, Mechanisation and Irrigation Development, Dr Joseph Made.
"Talk to the Minister, I think he will be issuing a statement on the latest developments regarding the ethanol project. I am not mandated to pre-empt the developments because I work under him," said Mr Nyabadza.
Dr Made told The Manica Post on Wednesday that the Government now owns a controlling 51 percent stake in the ethanol venture, while Green Fuel retains a 39 percent stake.
The remainder 10 percent stake will fall under the armpit of community ownership trust.
Dr Made, who is also the chairman of the Inter-Ministerial Committee coordinating the implementation of the ethanol project, said this was after the Government noted irregularities at the Chisumbanje and Middle Sabi Ethanol Project in which the investors — Macdom and Rating Investments — benefited more than the Government.
Dr Made said the Government was unanimous in that it would be setting a bad precedent by bending its own laws just to give the ethanol project preferential treatment.
"There is no more dilly-dallying on the Green Fuel project any more. The deal is as good as done. It is final, the Government now owns 51 percent. Cabinet took the decision after the realisation that this project being of national importance, will have to be done within the laws of the country. Under the new shareholding structure, the Government will own a 51 percent shareholding stake, the investors 39 percent and 10 percent stake for the community," said Dr Made.
Dr Made expressed optimism that the new arrangement will see all relevant information being put on the table.
Of late, a plethora of problems that have been haunting the Chisumbanje Ethanol Project have been a result of the company's reluctance to fully disclose its costs of ethanol production to the Government.
"This is now a proper joint venture involving the Government, the investor and the community, and as such we expect full disclosure of all the relevant information.
“We expect all the information that we could not access before to be put on the table so that progress can be made. We are going to diligently and expeditiously deal with all the sticky issues in a win-win manner," said Dr Made.
In the past, Dr Made accused ARDA and its partners, Rating and Macdom Investments of throwing spanners into the inter-ministerial committee's work by refusing to disclose relevant financial information. He also accused the company of trying to arm-twist the Government into giving into its demands by closing that plant.
The company has been refusing, arguing that it was prohibited to avail such details as the identity of its financers must remain secretive as they were under sanctions and such disclosures were likely to result in the company being put under the thumb of sanctions.
The company also said it also feared that information would be leaked to the local and foreign media, adding that compliance with the disclosure demands, apart from exposing its financers, would result in the legal action against them, thereby undermining the future expansion of the project. The other fear was that the company, like its investors, would be put under sanctions.
However, there were fears within the Government corridors that the investors amplified the magnitude of the investment, hence the denial.
It is against this background that the Government wants to assess its assets to ascertain their true value.
The investors are said to have poured $600m into that project.
Dr Made said the Government had a right to demand that information from any investor to ensure fair pricing of commodities and make necessary interventions to protect consumers whenever they are in danger of being milked.
Dr Made said the committee of ministers had specific instruction to ascertain the value assets, the handling of the land issue which has become a subject of discontentment among locals among other issues.
He said the issue of mandatory blending remains pending, and the company would be allowed to export its product.
Green Fuel has asked the Government to introduce mandatory blending policy to make blending of ethanol and petrol compulsory as an import substitution measure.
The company argues that mandatory blending policy dovetails with Government's mid term economic blue print which stipulates that Zimbabwe should "promote and use renewable energy including ethanol blending."
Energy Minister Elton Mangona has said the Government would not introduce mandatory blending of ethanol and petrol until Green Fuel explains why their product was more expensive than in other countries.
"Some of us will never make decisions in darkness; we make decisions that are fully considered so that we would be able to provide answers when people ask questions," Minister Mangoma said
"The Cabinet committee dealing with the issue has been asking for answers on why Green Fuel's ethanol costs more than $1, while in other countries prices average around $0.75? We want to know who is benefiting from the balance and why? The company should justify their prices and they have not done that; they are not cooperating with the cabinet committee."
The proposal is facing challenges particularly from fuel companies that have raised concerns that they need to allocate a third pump for the blended petrol, separate tanks, and separate transport carriers for ethanol.
Currently, conventional bulk petroleum companies' facilities and retail outlets are designed for petrol and diesel only and the introduction of blended petrol is posing problems to operators of service stations and petroleum companies.
Petrol companies in Zimbabwe are reluctant to incur additional costs to modify or upgrade their existing pumping and storage facilities.