From: "Armando R" <[EMAIL PROTECTED]>
Reply-To: Biofuel@sustainablelists.org
To: <Biofuel@sustainablelists.org>
Subject: RE: [Biofuel] Biofuel as a rural community development
projectinMozambique
Date: Thu, 30 Jun 2005 10:58:09 +0200
Alexis,
With the current oil prices I am sure many things can be done in rural
communities in Mozambique in the area of biofuels.
I would leave fuel ethanol for the sugar cane factories to produce. It can
be mixed up to 10% in gasoline as the Malawians are doing, apparently.
The rural poor buy kerosene (and sometimes gasoil) for illumination at very
high prices, above USD1000,00 per cubic metre in many remote areas, were
vegetable oil (coconut oil for instance) could be used. This would be a
very
small-scale project, but the local alternative price of the raw material
should be investigated. I have done some calculations on coconut oil and
found out that the raw material (copra) is the most important single cost
in
the production of oil.
The vegetable oil could also be used in diesel engines running the
small-scale mills scattered around the rural communities.
Best regards,
Armando A.C. Rodrigues
Av Francisco O. Magumbwe, 149
C.P 3279 Maputo 2
Maputo - Moçambique
Tel. Móvel: +258 82 3016040
e-mail: [EMAIL PROTECTED]
-----Mensagem original-----
De: [EMAIL PROTECTED]
[mailto:[EMAIL PROTECTED] nome de Alexis Rawlinson
Enviada: segunda-feira, 27 de Junho de 2005 20:43
Para: Biofuel@sustainablelists.org
Assunto: [Biofuel] Biofuel as a rural community development project
inMozambique
I am toying with the idea of trying to set up a pilot rural community
development project involving biofuel (bioethanol or biodiesel or SVO,
whichever is most appropriate) in Mozambique. I am hoping that you can give
me your opinion and advice on the technical feasibility, commercial
viability and ultimately, long-term sustainability, in a poor isolated
African rural setting, of small-scale, community-based, locally-run biofuel
production. If anyone has had experience of a similar project, I would be
extremely interested to have information about that.
Am I right in thinking that the technical feasibility is beyond question?
Bear in mind that we are talking about very isolated and poor communities
where everything has to be low-tech and low-maintenance. On the basis of
this criterion, biodiesel appears to be the most appropriate fuel as it can
be used in diesel vehicles/machines/generators (even very old and rickety
ones?) with no engine modifications. We can discount the issue of having to
change filters initially because of accumulated petrodiesel deposits
falling
off (we could include the cost of new filters in start-up subsidies). We
also don't need to worry about problems with cold starts, since Mozambique
is a tropical country.
I am more concerned about the question of commercial viability. The project
will only be replicable on a larger scale and sustainable in the long term
if, after initial start-up costs, every link in the value chain has an
incentive to participate and it is profitable for all concerned (i.e. the
anticipated gains should outweigh the expected costs, including the
opportunity cost of doing something else).
a) Inputs: Local farmers will have an incentive to supply the biofuel
production facility with feedstock only if prices paid and quantities
required by the production facility are stable and remunerative compared to
undertaking other activities, such as growing other crops for other
purposes.
b) Production: Local entrepreneurs will have an incentive to make
investments in biofuel production facilities and operate and maintain those
facilities only if they can sell their fuel at a remunerative price, i.e.
if
they can compete against fossil fuels (whether locally, nationally,
regionally or globally, depending on the scale of production).
c) Demand: We know that the world market for biofuels is growing rapidly
and
that the policy environment is becoming extremely favourable. However,
supposing, as is most likely to be the case, that local biofuel is most
competitive on the local market (and least competitive on the global
market,
where it has to compete with industrial-scale production), there must be a
critical mass of buyers on that market, i.e. local communities must have
the
desire / ability to invest in machines, vehicles or generators, and the
ability to pay for biofuel on a regular basis to run those machines.
I guess the root question is the following: is the current situation in
rural southern Africa - no biofuel production - a market failure that could
be resolved by kickstarting a virtuous cycle in the sector with start-up
outreach and support activities and subsidies, or is it simply not an
economically viable sector except with permanent subsidy and support?
It seems to me that, to answer this question, there are three crucial cost
assessments which need to be made:
a) Start-up costs: the required investments by farmers, by local biofuel
entrepreneurs, by future biofuel consumers, and to what extent can/should
"outreach and support activities" subsidize these fixed costs?
b) Price and availability of feedstock: How will local feedstock production
compare to growing other crops or not growing crops at all? Might it
potentially actually be cheaper to import the feedstock from elsewhere
(which would defeat much of the local development aspect of the project)?
P.S. A lot of sugarcane is grown in Mozambique and the country has big
potential to become a major low-cost producer of sugar (and therefore
ethanol?) (although again, we are more likely talking about large estates
than small-holders).
c) Value of market demand for biofuel: How cheaply will local biofuel
producers be able to sell their production, and how large will be their
market? To what extent can they compete with fossil fuels, and imported
industrial-scale biofuel producers on the local/national/regional/global
market?
Do you agree with this general approach? Do you think the idea is viable?
Have you undertaken this kind of cost assessment, or do you know of someone
who has? Do you have ballpark figures for the various costs involved? In
short, should I keep working on this idea and try to turn into reality or
are the chances of success too low to merit serious attention?
Many thanks for your help.
Alexis
Alexis Rawlinson
Economista, UTCOM-DRI
Ministério da Indústria e Comércio
Endereço postal: C.P. 400, Maputo, Moçambique
Tel: +258 82 8059650
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