Zambian biofuels market shows promise, says local banker

Zambia’s biofuels industry is gathering momentum as the country’s stability, access to resources and alternative fuel demand makes it an attractive investment destination, according to a local banker.

The Zambian government has opened up the country’s biofuels market considerably for the first time in an effort to improve its self-sufficiency, resulting in the announcement of two foreign investments in the same week.

The latest is a planned $500 million investment into a sugar and ethanol production facility in Luapula province, in the north of the country, by Greenfuels, a Zimbabwean ethanol producer. Greenfuels has already acquired 30,000 hectares of land for a sugar cane plantation the project and expects to finalise the deal in the coming months, according to local reports.

The Greenfuels proposal is one of six tenders currently awaiting approval by the Zambian ministry of Energy and while the biofuels market is still nascent, it is a promising potential investment for investors globally, according to Rajan Mahtani, chairman of Finance Bank Zambia.

“There has been a lot of mining development in Zambia and that has resulted in heavy increases in fuel demand,” he told Agri Investor. “The country needs to cut down its fuel imports, and biofuels are a viable alternative to achieve this. In addition, the foreign exchange savings would be considerable.”

The country is also well resourced. Zambia has access to 40 percent of the region’s water, and benefits from 750,000 square kilometres of agricultural land. The government has also invested heavily in road infrastructure, spending $3.5 billion in the last two years, significantly improving rural access to urban markets, Mahtani added.

Earlier this week UK-based bioenergy producer plant operator, Sunbird Bionergy, announced a planned cassava ethanol production project in Zambia to be financed by a consortium of investors including Finance Bank Zambia and China New Energy, a large bio refineries builder in Asia.

The Sunbird project is in the most advanced stages according to Mahtani, after securing $150 million in equity and debt financing and with further commitments awaiting agreement once government approval has been confirmed. “We have 20,000 out-growers ready to work the land that will be used for the raw materials. We’re not waiting for the plant to be completed. We can immediately engage the out-growers to begin the agricultural production and train them to process the produce for ethanol production,” he said.