South Africa invests €196 million

A planned 2 billion rand (€196 million) is to be invested by South Africa in the construction of an ethanol plant located in the Eastern Cape province.

About 60% of South Africa's fuel is currently imported. Furthermore, due to 4 of its 6 oil refineries recently shutting down, the country has been experiencing fuel shortages.

The government-funded plant would help develop South Africa's biofuels industry, reducing its dependence on imported fuel. However the growth of this industry has previously been met with concerns about food security and prices as well as an inadequate regulatory regime.

Construction of the plant is set to begin later this year, with operations expected to commence in 2014. It will produce an approximate 90 million litres of fuel per year initially, with the potential for this to increase to 200 million over time.

'We have already done the pilot, so this now is beyond the pilot stage. We are quite confident that this is going to be a successful project,' says Agriculture Minister Tina Joemat-Pettersson.

However, the South African Petroleum Industry Association (SAPIA) has highlighted some concerns about the project, emphasizing the government's need to ensure that the push for biofuels does not compromise the availability of fuel supplies.

South Africa's Department of Energy plans to finalise the mandatory blending regulations by the end of this year. The government's target is for biofuels to annually contribute 2% to liquid fuels consumption by 2013.

Sugar Beet RSA is collaborating with the government on the project.