South Africa Energy Dept to Push Biofuels

Tyatya said the decision would be made if the government realised producers would be unable to access the market unless it was mandatory. Tyatya said the process would go through the cabinet. "We can do it any time because it is actually the prerogative of the minister," said Tyatya.

The state released the biofuels policy document last December. It set a target of having a 2 percent ethanol blend by 2013.  But there has been no interest in the project. Tyatya confirmed that his department had not received a single application for a licence to produce ethanol.

The sugar industry said the government's refusal to create a mandatory market was discouraging. Sugar is regarded as the most suitable crop for ethanol production.
Ethanol plants were not cheap, he said. "They cost billions of rands. No one will make that kind of investment unless there is a market."

Anton Moldan, an environmental adviser at the South Africa Petroleum Industry Association, said the oil industry was supportive of the biofuels strategy as long as it was cost neutral, environmentally friendly and sustainable.

He said recommendations had been given to the government, including setting up an expert working group to look at implications. Neil McHardy, the strategy development manager at Engen, said it would determine if a biofuel investment would be viable. Tyatya said there would be various fuel levy rebates for those who sold ethanol, because it would not be taxed.

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