GOVERNMENT’S import bill towards purchase of crude oil would

The Post (Lusaka ) - Zambia - Thursday 15 June 2006

"With the continued rise in crude oil prices, we have no option but to utilise other alternative sources of energy as a way of mitigating the foreign exchange spent on crude oil as well as creating employment. In fact when production begins, the import bill will be reduced by 20 per cent," Mutati said. "And it is for this reason that government is putting in place a framework that will regulate and facilitate investment in production of bio-fuel."

Mutati said since bio-fuel would be a new development in the country, the government would encourage production to begin at 10 per cent levels until the industry grew. "This sector, if well developed, has the potential to cater for the entire region, so industries which are involved in production of other alternative sources of energy should be supported," Mutati said. And Alloo called for assurances that would lessen the impact on companies that would be producing ethanol. "Should crude prices fall and we have already embarked on full time ethanol production, what guarantee do we have from government that our investments will not be affected since plants may reduce production and consequently close down?" Alloo asked. "Actually these issues should be addressed in the framework to guide the sector, otherwise we are ready to embark on production." He said the company at its production rate had the capacity to produce four million litres of ethanol that could be used in the production of bio-fuel. "We have enough molasses that will result in producing four million litres of ethanol and through our expansion programmes, we can double production to support demand," said Alloo. However, Mutati said government had visualised such occurrences and would make sure the sector's concerns were considered. "If prices of crude tumble, then government will put in place measures to cushion the impact on the concerned companies and these provisions will be part of the framework we are working on," said Mutati. Zambia has three sugar producing companies namely, Zambia Sugar, CFS and Kalungwishi Sugar.