Gangi Longa
JF-Expert Member
- Feb 5, 2010
- 275
- 135
Ethanol can bring $30 million annually
Published on: Fri, 02/05/2010 - 7:42pm
Timothy Kahoho
LARGE scale sugarcane plantations in this country are expected to be the catalyst of sustainable production of ethanol, for export to Europe, from 2012 onwards.
According to Vice President of Sekab Bioenergy Tanzania Limited, Jonathan Nkandala, a 200 hectare farm of hybrid sugarcane was established in 2007 at Kigongoni Seedcane Project, with a view to agro-energy production in Tanzania. Nkandala has stated that the Swedish-based SEKAB Group is the largest importer of sugarcane-based ethanol into European markets, which identified in 2004 the need to diversify sources in Africa.
The Sekab group estimates importing ethanol from the factory will commence by 2011 in Bagamoyo, and will have a value of US $ 30 million with effect from 2017. It was Sekab which in fact initiated the process of building an African platform for the highest possible sustainable production and supply of ethanol and its byproducts, which are sugar and electricity. Kigongoni Seedcane Project was recently visited by Prime Minister Mizengo Peter Kayanza Pinda, at its site in Bagamoyo district, where the investors leader briefed him about the progress of the project in general.
Premier Pinda was informed that, after a number of desktop studies, a first visit by the investors was made to various African countries in 2005. The visit involved meetings held with different parties in different countries including the Government of Tanzania, leading up to the signing of a Memorandum of Understanding with government officials in June 2006. The MoU included a commitment to establishing an African role model for a biofuel project in this country.
The outcome of the negotiations between the parties was an investigation by the aforesaid firm in February 2007 to identify suitable areas for sustainable agro-energy projects in Tanzania. Their search pinpointed Rufiji district, with a potential of about 200,000 hectares of land for establishing a cluster of agro-energy programme sites, within a 15 to 20 year period.
However, there were discussions with government officials about the suitability of the old Razaba ranch in Bagamoyo district, which was offered as the area for the first project, to jump-start the ethanol industry. Selection of Bagamoyo meant being close to Dar es Salaam with the infrastructure already in place. Furthermore, the Kigongoni Seedcane farm with drip irrigation system was particularly established in Bagamoyo for the testing of a water efficiency scheme and of different sugarcane varieties, and to start multiplication of the raw material for production of sugar and ethanol.
Macro studies and a river basin study of the Lower Ruvu and Wami Rivers have been conducted as they entail a rapid supply of seedcane to the 200,000 hectares of agricultural project in the Rufiji basin. It has been worked out that the project will have 6,200 hectares of sugarcane in a production cycle for producing 65,000 tons of sugar a year, and a further 25,000 cubic litres of ethanol. Apart from the sugarcane plantation, the project will have between 5,000 and 7,000 hectares for agro-forest, in order to feed the boiler plant with biomass. This will also provide 25,000 megawatts of electricity to the national grid.
The Environmental and Social Impact Assessment study was completed and approved by the National Environmental Management Council (NEMC), and water rights for the project have been granted. It has however been observed that the global financial crises in 2008 caused problems for the entire energy industry, including the Sekab Group and its African project development. It must be realized that after an injection of new equity, the Sekab Group changed from a 50/50 private/municipality co-ownership into being majority controlled by three municipalities in northern Sweden.
At that juncture it became politically impossible to maintain a direct ownership of development or production units in Africa. A new owner structure had to be developed or the business would be closed down. This information was given to the Government of Tanzania in March 2009 and to President Kikwete in May2009, but also that Sekab was determined, despite the financial crises and internal political turmoil, to try to support the development of a new owner structure that would allow the projects to develop in line with the MoU from 2006. At that time, mixed signals had been picked up by the market regarding the Government of Tanzanias strategy towards biofuels and endorsement of the emerging AgroEnergy sector in general and the Sekab initiative in particular.
In order to remove any doubts, the Government of Tanzania was requested to endorse the initiative and become a shareholder in the local company, Sekab BioEnergy Tanzania Ltd, and also to give a credit enhancement guarantee that would allow the development work to continue, so as to start up the Bagamoyo Project in mid 2010, with one year of delay. With encouraging feedback from the President and explicit expressions of future support from Ministry of Finance and Ministry of Energy and Minerals, the private owner group, Ecodevelopment in Europe AB, who own 30% of Sekab, set out to save the Tanzanian platform.
The Government of Tanzania identified theTanzania Petroleum Development Corporation as the company that was most suited to becoming a shareholder in Sekab Bioenergy and to conduct a due diligence study about the suitability of the business and make a recommendation to Government of Tanzania. The current MoU with the government has apportioned a shareholding of 10% to TPDC, signed between TPDC and Sekab in early August 2009. This was after finalizing the due diligence process. The Ministries of Finance and of Energy and Minerals are currently looking into how a credit enhancement guarantee could be granted to Sekab BioEnergy, Tanzania.
On October 21 last year, Ecodevelopment took over full ownership and commitments to meet the time plan for a financial agreement with the banks in June of 2010 for the Bagamoyo project, valued at US $ 240 million. At the same time the Sekab Group gave a guarantee to buy all Ethanol produced in the first two plants for the first ten years of production. Sugarcane crushing will commence in 2012 with 700,000 tons of raw material to produce 65,000 tons of sugar, and 25,000 cubic litres of ethanol.
At the moment, potential co-investors and debt providers are not willing or able to commit themselves until government endorsement is clear, through shareholding and a minor credit enhancement. It is now a matter of grave concern that if this is further delayed it will jeopardize the entire project and future development .
http://www.pigahodi.com/node/493
Published on: Fri, 02/05/2010 - 7:42pm
Timothy Kahoho
LARGE scale sugarcane plantations in this country are expected to be the catalyst of sustainable production of ethanol, for export to Europe, from 2012 onwards.
According to Vice President of Sekab Bioenergy Tanzania Limited, Jonathan Nkandala, a 200 hectare farm of hybrid sugarcane was established in 2007 at Kigongoni Seedcane Project, with a view to agro-energy production in Tanzania. Nkandala has stated that the Swedish-based SEKAB Group is the largest importer of sugarcane-based ethanol into European markets, which identified in 2004 the need to diversify sources in Africa.
The Sekab group estimates importing ethanol from the factory will commence by 2011 in Bagamoyo, and will have a value of US $ 30 million with effect from 2017. It was Sekab which in fact initiated the process of building an African platform for the highest possible sustainable production and supply of ethanol and its byproducts, which are sugar and electricity. Kigongoni Seedcane Project was recently visited by Prime Minister Mizengo Peter Kayanza Pinda, at its site in Bagamoyo district, where the investors leader briefed him about the progress of the project in general.
Premier Pinda was informed that, after a number of desktop studies, a first visit by the investors was made to various African countries in 2005. The visit involved meetings held with different parties in different countries including the Government of Tanzania, leading up to the signing of a Memorandum of Understanding with government officials in June 2006. The MoU included a commitment to establishing an African role model for a biofuel project in this country.
The outcome of the negotiations between the parties was an investigation by the aforesaid firm in February 2007 to identify suitable areas for sustainable agro-energy projects in Tanzania. Their search pinpointed Rufiji district, with a potential of about 200,000 hectares of land for establishing a cluster of agro-energy programme sites, within a 15 to 20 year period.
However, there were discussions with government officials about the suitability of the old Razaba ranch in Bagamoyo district, which was offered as the area for the first project, to jump-start the ethanol industry. Selection of Bagamoyo meant being close to Dar es Salaam with the infrastructure already in place. Furthermore, the Kigongoni Seedcane farm with drip irrigation system was particularly established in Bagamoyo for the testing of a water efficiency scheme and of different sugarcane varieties, and to start multiplication of the raw material for production of sugar and ethanol.
Macro studies and a river basin study of the Lower Ruvu and Wami Rivers have been conducted as they entail a rapid supply of seedcane to the 200,000 hectares of agricultural project in the Rufiji basin. It has been worked out that the project will have 6,200 hectares of sugarcane in a production cycle for producing 65,000 tons of sugar a year, and a further 25,000 cubic litres of ethanol. Apart from the sugarcane plantation, the project will have between 5,000 and 7,000 hectares for agro-forest, in order to feed the boiler plant with biomass. This will also provide 25,000 megawatts of electricity to the national grid.
The Environmental and Social Impact Assessment study was completed and approved by the National Environmental Management Council (NEMC), and water rights for the project have been granted. It has however been observed that the global financial crises in 2008 caused problems for the entire energy industry, including the Sekab Group and its African project development. It must be realized that after an injection of new equity, the Sekab Group changed from a 50/50 private/municipality co-ownership into being majority controlled by three municipalities in northern Sweden.
At that juncture it became politically impossible to maintain a direct ownership of development or production units in Africa. A new owner structure had to be developed or the business would be closed down. This information was given to the Government of Tanzania in March 2009 and to President Kikwete in May2009, but also that Sekab was determined, despite the financial crises and internal political turmoil, to try to support the development of a new owner structure that would allow the projects to develop in line with the MoU from 2006. At that time, mixed signals had been picked up by the market regarding the Government of Tanzanias strategy towards biofuels and endorsement of the emerging AgroEnergy sector in general and the Sekab initiative in particular.
In order to remove any doubts, the Government of Tanzania was requested to endorse the initiative and become a shareholder in the local company, Sekab BioEnergy Tanzania Ltd, and also to give a credit enhancement guarantee that would allow the development work to continue, so as to start up the Bagamoyo Project in mid 2010, with one year of delay. With encouraging feedback from the President and explicit expressions of future support from Ministry of Finance and Ministry of Energy and Minerals, the private owner group, Ecodevelopment in Europe AB, who own 30% of Sekab, set out to save the Tanzanian platform.
The Government of Tanzania identified theTanzania Petroleum Development Corporation as the company that was most suited to becoming a shareholder in Sekab Bioenergy and to conduct a due diligence study about the suitability of the business and make a recommendation to Government of Tanzania. The current MoU with the government has apportioned a shareholding of 10% to TPDC, signed between TPDC and Sekab in early August 2009. This was after finalizing the due diligence process. The Ministries of Finance and of Energy and Minerals are currently looking into how a credit enhancement guarantee could be granted to Sekab BioEnergy, Tanzania.
On October 21 last year, Ecodevelopment took over full ownership and commitments to meet the time plan for a financial agreement with the banks in June of 2010 for the Bagamoyo project, valued at US $ 240 million. At the same time the Sekab Group gave a guarantee to buy all Ethanol produced in the first two plants for the first ten years of production. Sugarcane crushing will commence in 2012 with 700,000 tons of raw material to produce 65,000 tons of sugar, and 25,000 cubic litres of ethanol.
At the moment, potential co-investors and debt providers are not willing or able to commit themselves until government endorsement is clear, through shareholding and a minor credit enhancement. It is now a matter of grave concern that if this is further delayed it will jeopardize the entire project and future development .
http://www.pigahodi.com/node/493
