Pricing model delays ethanol fuel roll out

Plans to roll out the Ethanol Vehicle Driven Project (EVDP)—where vehicles will use ethanol as a standalone fuel or a blend of ethanol and petrol—may take longer before it officially starts as authorities are yet to approve the pricing model.

Ethanol Company Limited (EthCo), a subsidiary of Press Corporation Limited (PCL), in April last year presented a proposal for the pricing model for ethanol to the Ministry of Finance and Economic Planning but it is yet to be considered.

In an interview with Business News last week, PCL general manager responsible for operations Christopher Guta said the company had proposed that the fuel should cost 20 percent lower than petrol, despite being constrained by a number of problems in the production and implementation process.

“Prices of the raw materials used to produce this fuel are charged in dollars which is expensive, hence we would like government to consider exempting us from levies such as the Malawi Energy Regulatory Authority levy and the rural electrification levy on fuel to enable us to produce it consistently,” he said.

While waiting for approvals of the pricing, the company is tendering for the conversion kits and has scaled up efforts to boost its capacity by engaging farmers to grow and sell sugarcane to EthCo and PressCane.

Treasury spokesperson Nations Msowoya confirmed in an interview on Wednesday that the ministry received the proposal and they are working on it.

“We are reviewing the pricing mechanism to ensure that the price does not hurt the consumer and producer of the product, but rather benefit them and the economy at large,” he said.

EVDP was initiated in 2004 after a cabinet directive that Malawi should explore other sources of fuel for vehicles with the overall objective of contributing to economic development by promoting the use of ethanol as an alternative source of fuel energy.

Experts argue that using local fuel can positively contribute to fuel price stability, reduce vehicle running costs, reduce foreign exchange requirements and help address challenges faced by the country due to reliance on imported fuels.

Puma Energy managing director, Davies Langesi, in a previous interview with Business News described the project as a right alternative for petroleum fuel.

Langesi added that use of ethanol as vehicle fuel as compared to petrol has a net positive benefit cost impact on the economy and is an excellent route for Malawi.