The general manager of Absa AgriBusiness and chairperson of the SA Biofuels Association, Andrew Makenete, said fuel levy exemptions and forced blending are not sufficient to attract investment for the country’s biofuels industry.
Speaking at the conference, Makenete said an equalisation fund of R2 billion to R5 billion, which has already been proposed by the team tasked to draw up a biofuels industrial strategy, is also needed to encourage investment. “It is true that this fund would cost taxpayers, but we need to look at the benefits,”
Makenete told delegates. In addition to its environmental benefits, the biofuels industry has potential to create over 100 000 jobs and can result in huge savings on forex and oil purchases. estimates total returns into the economy are a minimum of R10 for every R1 invested by government.
Makenete pointed out that a new synthetic fuel refinery in would cost a minimum of R35 billion compared with 10 biofuels plants at a cost of about billion. G rain chairperson Neels Ferreira said agricultural role-players will, however, have to take active charge in the creation of the biofuels strategy and the development of the market to prevent other role-players such as petroleum companies, financiers or investors, or government, from making decisions for them that might not be in their best interest.
Ferreira said government interference in the grain and oilseed market should be limited so the biofuels industry can be established under free market principles. A policy also needs to be created to prevent imported raw materials from replacing local production or pressurising producer prices. “We need to ensure that the biofuels industry adds value to agriculture and does not result in farmers having to invest more than they get of this opportunity,” he said. The process must be well managed to ensure that the creation of a biofuels market does not endanger food security or other markets, Ferreira added. This would entail good market research on market capacity of biofuels in and the alignment of production accordingly. Research so far indicates that only has capacity for 10 refineries. Makenete suggested that a framework be created to control the amount of biofuels processors and the amount of fuel they are allowed to produce to create stability and add predictability to the market. This would significantly enhance production and financial planning of all potential role-players in the industry. The incorporation of 4,5% biofuels in the fuel market by 2013 would need an additional market of 1,6 million tons of maize, sorghum, wheat or triticale and a million tons of soya or 500 000 tons of canola.