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Ethanol blending resumed with the Government yesterday announcing the increase in the mandatory blending ratio back to 10 percent from 5 percent though sometimes unleaded petrol was available.Prior to blending, Zimbabwe used its little reserves of foreign currency to import 100 percent of its petrol requirements, losing the very liquidity it requires to boost the economy.

Zimbabwe is a landlocked country that does not produce, at least for now, any petroleum products and relies on imports.

Fuel is vital for virtually most economic activities and the price at which it is secured is important.

Because Zimbabwe is a price taker and bystander in the dynamics that influence the price of petrol on world markets, only what it does internally can cushion it from what happens externally.

Until July last year, global oil prices were rising and like many non-oil producers, Zimbabwe had to pay through the nose to oil its economic activities, a development that has a negative effect on inflation.

As such, we can only pray that the situation in the country with regard to production of ethanol can only improve rather than get worse.

It is our fervent hope that Zimbabwe will continue, gradually, to increase the ethanol blending threshold to levels that will see the country saving significantly more by cutting on imports of petrol.

It is thus important to note that this can only happen if Government addressed ethanol production challenges, such as what happened in December last year, to ensure consistent supply of adequate ethanol for traders to blend unleaded petrol.

Apart from making sure that arda and its partners, Macdom and Rating, increase cane production to meet higher blending thresholds, more producers should be licensed to secure supply.

The precedent everyone would not want to recur was when Government had to reduce the mandatory blending ratio from 15 percent to 5 percent last December when the sole supplier, Green Fuel, failed to harvest cane due to waterlogged sugar cane fields.

arda chairman Mr Basil Nyabadza on Tuesday said Green Fuel had already started building ethanol reserves to avoid shortage and supply hiccups similar to what happened last December.

It’s, however, difficult to build sufficient reserves as ethanol easily vaporises empowering farmers to grow sugar cane would be the way to go.

Tongaat Hullet has successfully empowered farmers around its estate in Triangle to grow cane for sugar production, arda should follow the same route.

arda has a lot of idle land in low lying areas which are most suited to the growing of sugar cane.

This is in light of the fact that huge potential economic benefits can be derived from enforcement of higher mandatory blending thresholds, which is common in many parts of the world.

Blends of E10, 10 percent ethanol, or less are used in more than 20 countries around the world, led by the United States, where ethanol represented 10 percent of the US gasoline fuel supply in 2011.

Blends from E20 to E25 have been used in Brazil since the late 1970s. E85 is commonly used in the US and Europe for flexible-fuel vehicles.

Hydrous ethanol or E100 is used in Brazilian neat ethanol and flex-fuel light vehicles and hydrous E15 called hE15 for modern petrol cars in the Netherlands.

Zimbabwe requires an average of $120 million for fuel imports each month, translating to about $1,4 billion on an annual basis. Higher ethanol blending thresholds can significantly cut this outflow.

Source : The Herald