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Government would maintain flexibility on mandatory blending thresholds while monitoring the situation at Chisumbanje ethanol plant where production was affected by heavy rains

Business Reporters
GOVERNMENT will engage Green Fuel on how the firm should build sufficient ethanol stocks to cover unforeseen interruptions to supply. Energy and Power Development Minister Dr Samuel Undenge said Government would engage the sole licenced supplier, over the issue of buffer stocks.

“We are currently talking to the ethanol producing company so that we build stocks to avoid a scenario caused by heavy rains and also there should be a statutory maintenance of the plant to shut down for a period of one month to give room for service,” he said.

Government had to revise its blending requirement for all unleaded petrol to be blended with 15 percent ethanol to a 5 percent blending threshold.

As the situation improves we are going to increase the blending ratio.

The production of ethanol saves the country on imports of petrol,” he said.

Fuel takes up a significant chunk of the import bill at around $800 million.

Last month, the new energy minister moved fast to intervene and allow the sale of 5 percent blended petrol as there was not enough ethanol to blend.

“Ethanol output has been reduced due to heavy rains experienced at Chisumbanje and I had to intervene and extend the licence to Triangle so that ethanol comes to the market. To maintain blending of our petrol I reduced the level to E5,” he said.

The minister said the move was, however, only temporary and that once there is enough ethanol on the market, he would bring the blend back to 15 percent ethanol then the ratio will be adjusted upwards.

Minister Undenge said last week that Government would maintain flexibility on mandatory blending thresholds depending on situations.

In January last year, the Government had to request another ethanol producer, Triangle, to complement supplies by Green Fuel to avert the shortage.

However, the country’s laws only permit partnership with Government or State entities in ethanol production as in the case of Green Fuel.

Minister Undenge said in most ethanol producing countries, including Brazil, the blending ratio is related to the amount of petrol in the market.

Government increased the mandatory blending level to 15 percent from 10 percent last year.