Tuesday, 14 August 2012 10:23

Sugar industry projects in Africa diversifying into fuel and power

Sugarcane can be used for fuel or power generation. To date, there are a number of these projects underway in countries such as Sierra Leone, Angola and the aborted Illovo investment, which is expanding its sugarcane production in Mali, Malawi and Tanzania.

There are many underlying reasons why the sugar industry in Sub-Saharan Africa (SSA) is diversifying into fuel and electrical power. According to Richard Orendo-Smith, a chemicals materials and food research analyst at Frost & Sullivan, fuel from sugarcane is generated through the production of bio-ethanol while power generation emanates from burning sugarcane residues, otherwise called bagasse.

He says that, to date, there are a number of such projects underway in countries such as Sierra Leone, Angola and the aborted Illovo investment, which is expanding its sugarcane production in Mali, Malawi and Tanzania. “In Angola, a sugar and bio-ethanol project was started as a joint venture between Sonangol, a state oil company, Damer and the Brazilian firm Odebrecht,” he adds. “The project is structured so that Sonagol owns 20%, Damer 40% and Odebrecht 40% of the company.” The project aims to cover a land size of 4 000 ha under sugarcane cultivation initially. The expected project capacity will translate to 30-million litres of ethanol, 250 metric tonnes of sugar and an estimated 160 000 megawatt-hours. The total initial investment for the project is estimated at $250-million.

Orendo-Smith says a similar project is being initiated in Sierra Leone by Addax and the Oryx Group, called the Makeni Ethanol and Power Project. “The investment value for the project is $340-million. It should be on track by the end of 2013.” According to him, the Makeni Ethanol and Power Project will stretch over 10 000 ha of land that is irrigated and mechanised. “The project is expected to produce 1-million tonnes of sugarcane per annum, 93 000 MT of ethanol and generate power of 15 MW for the national grid.” The Makeni Ethanol and Power Project will be funded by entities such as the Industrial Development Corporation (IDC), the African Development Fund (AfDB), Swedfund and Emerging Africa Infrastructure Fund, while local project financing will be sourced initially from the Angola Forment Bank (AFB) and Bank Espirito Santo (BESA), including the Brazilian State Development Bank.

International market

European Union (EU) countries have passed a law that will come into effect by 2020, which compels companies producing and marketing fuel to mix refined crude oil with at least 10% of bio-ethanol. “The main objective of this law is to mitigate the effect of greenhouse gas emissions on the environment,” Orendo-Smith notes. Consequently, most of the bio-ethanol produced through these projects in Africa is earmarked for the EU market.  

He says that, in this context, it is important to emphasise that Africa has an estimated 60% of the total available arable land globally. “In addition, its climate is perfect for sugarcane cultivation, especially under tropical or semi-tropical climatic conditions in places such as West, Central, East and parts of Southern Africa.” He concludes that investments for projects aimed at producing ethanol from sugarcane for fuel consumption, especially as the current price of fossil oil makes such projects economically very profitable, will most likely increase in Africa in the medium- to long-term period.

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