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The absence of competition in the production of ethanol has created an unhealthy monopoly that has prevented costs of fuel from dropping after blending, a senior Government official has said. Energy and Power Development permanent secretary Pattison Mbiriri said with the passage of time the situation would improve as the sector was still emerging.

“There is a cost reduction of $0,2 cents per every 5 percent and with the current mandatory blending ratio standing at 15 percent, it means that the final cost reduction is just $0,6 cents,” he said. “So the cushion is there but it is still very small mostly because of the monopoly that still exists in the sector. The business is new, they are learning and we also have to factor in the variables of costs of power and the cost of labour,” he added.

Mr Mbiriri said with the sector growing and new players coming in, there would be changes as competition grew, leading to higher margins in cost pricing after blending. At the moment the Chisumbanje based Green Fuel is the sole producer of ethanol, which is made from sugarcane.

It is the largest ethanol plant in Africa and comprises large swathes sugarcane plantations in Chisumbanje and Middle Sabi, with the ethanol plant located in the Chisumbanje area of Chipinge district, Manicaland province. Green Fuel is a consortium of local investors in partnership with government entity the Agriculture and Rural Development Authority (ARDA).

The absence of other players has meant that development in the sector has moved at the pace of the single biggest company. Mr Mbiriri said the Government expected competition and urged players to explore and invest in the area. – New Ziana.