Purpose of mandatory blending
IN February 2008, a memorandum was presented to Cabinet that proposed the development and use of biofuels in order to mitigate the impact on the economy of the rise in fuel prices.
In the year 2013, the government introduced Mandatory Blending of Anhydrous Ethanol with Unleaded Petrol. Initially, the blend was set at 10%, meaning that all licensed procurers and wholesalers of unleaded fuel must ensure it has been blended with a minimum 10% of ethanol produced by a licensed producer. This mandate has subsequently been varying between 10% and 20%.
Thus, Zim Morning Post understands that fuel blending was introduced for economic, social and environmental reasons which also included energy security, meaning that the blends increase the fuel pool in the country.
In 2019, the Reserve bank of Zimbabwe governor, John Mangudya, while presenting in Parliament also said blending of ethanol with fuel has been saving the country millions of dollars.
“Our fuel consumption patterns have been such that if we were to consume 50 million litres of fuel, we would mix it with ethanol and, therefore, make savings of about US$$10 million because we have 20% ethanol going into fuel,” Mangudya is reported to have said.
However, last week the Zimbabwe Energy Regulatory Authority (Zera) increased fuel prices by over 150%, with the ethanol component being the most expensive one.
But who are the players?
Despite other small players in the ethanol production sector, Zimbabwe has always been held at ransom by local tycoon Billy Rautenbach’s monopoly.
Rautenbach is a major shareholder in Green Fuel, a joint venture between the State-controlled Agricultural and Rural Development Authority (Arda) and the tycoon’s companies, Macdom Investments and Rating Investments.
He has multi-million-dollar business interests in several sectors of the economy, among them mining, transport, farming as well as bio-fuels.
Rautenbach’s Green Fuels ceased operations in 2010 before government chipped in by the introduction of a statutory monopoly as well as pushing for legislation prescribing a mandatory blending of all petrol in Zimbabwe with 15% ethanol. Before the mandatory Statutory Instrument by government, Rautenbach no longer had buyers for his ethanol, besides there were other cheaper ethanol sources from abroad.
Who is Billy Rautenbach?
Rautenbach has always been associated with the ruling Zanu PF since the late former President Robert Mugabe’s time.
He is one of the few local white people who have always bankrolled the party.
He is alleged to have profited from Zimbabwe’s military venture in the Democratic Republic of the Congo in 1998 and to have donated generously to Zanu PF’s election coffers.
As a result, he was placed on the European Union’s targeted sanctions list.
Who sets ethanol prices?
Early this year, outspoken former Zanu PF youth leaders Godfrey Tsenengamu and Lewis Matutu openly asked the ruling party to look into serious corruption and economic saboteurs and among their list was Rautenbach.
In response to the allegations, in a statement Rautenbach said Zera was in charge of setting up ethanol prices.
However, investigations by the Zim Morning Post this week indicate that Rautenbach actually dictates the prices.
“He has monopoly and the producer is the one who sets up prices,” said the source close to the developments.
“Zera only regulates and has no power of the ethanol prices.”
Commenting on the exorbitant ethanol prices, legislator Temba Mliswa posted on his microblogging site Twitter handle, saying:
“Petrol comes in at around US$0.3776 + 0.30 duty: From this pricing, they has been added a staggering US$1.10? If the ethanol causes such a pricing hike, why not just sell petrol at 80c and leave sugar cane for sugar?”