Initiative. The ever fluctuating price of petroleum products and the dangers the use of fossil fuels presents to the environment have forced the world into considering alternative energy sources, and as Isaac Mufumba reports, Kakira Sugar Works has stood up as a pioneer in Uganda’s biofuels industry.
Clustered under a watch-like tower that stands out like a giant phoenix in the sprawling sugarcane fields are giant distillation tubes. Save for the distant hum from the nearby Sugar factory, it is silent here, which gives a deceptive impression of inactivity.
Inside the glimmering tubes the process of turning molasses, a residue from the sugar milling process, into ethanol is underway at a $36.6m (Shs 130b) distillery that came into production at the end of November last year.
The molasses are first pumped into a tank from where they undergo a fermentation process. The fermented mash is then pumped into distillation columns for heating, a process which results in the production of raw industrial alcohol.
The alcohol is then taken through a process of dehydration, which involves the removal of as much water and impurities as possible, leaving only ethanol suitable for use as a substance called biofuel.
Biofuel, simply speaking, is a fuel derived directly from living matter. In this case the living matter is sugar cane (remember that plants are living things too?)
Biofuels differ from fossil fuels like coal and petrol because fossil fuels are derived from remains of living organisms that died thousands or millions of years ago.
The biofuel produced at the plant in question is mainly for blending with petrol.
However, the same industrial alcohol could be subjected to a rectification process which leads to the production of Extra Neutral Alcohol (ENA) or potable alcohol for use in the beverages industry, and as a sanitizer in hospitals.
During the distillation process, off-specification ethanol that does not meet quality standards of either fuel grade anhydrous ethanol or ENA, is produced and stored separately. This alcohol will be ‘denatured’ to protect users against consumption and used as cooking fuel in ethanol clean cook-stoves.
The Joint Managing Director of Kakira Sugar Limited, Mr Mayur Madhvani, says the ethanol distillery, which was installed by the India-based Praj Industries, will be producing either 20m liters of fuel grade anhydrous ethanol (biofuel) or 20m liters of extra neutral alcohol per annum.
Less than six months after production first began, Kakira’s ENA is already making inroads into the beverages market. Uganda Breweries Limited (UBL), the distillers of Uganda Waragi and a whole range of whiskies and spirits and one of the biggest consumers of ENA, has since taken on Kakira as its leading supplier of ENA.
“We have been importing it (ENA) from Kenya, South Africa, India and Mauritius because local suppliers could not meet our quality demands but Kakira ENA is world class and we have already started placing orders with them. This will save foreign exchange for the country and improve our manufacturing costs,” an official at Uganda Breweries says.
Use of biofuels is not a new concept in other parts of the world. Countries like Brazil have been using them for close to 100 years now, having started as early as 1919 when the Governor of Pernambuco directed all official vehicles to run on ethanol. Ethanol production broke into a canter and by 1931 Brazil had developed 25 different types of ethanol for use in its automobiles.
The rest of the world had remained indifferent to biofuels but was forced to start paying closer attention to them in the wake of the 1973 and 1979 oil crises.
The former was caused by a decision by the Organization of Petroleum Countries (OPEC) to declare an oil production embargo, while the latter was caused by the outbreak of the Iranian Revolution.
The 1973 crisis forced crude oil prices to jump from $3 per barrel to nearly $12 while the 1979 crisis drove the process from $12 to about $39.5 per barrel yet production had dropped by only 4 percent.
However, with the discovery that burning of fossil fuels was responsible for the high levels of carbon dioxide in the atmosphere, the argument ceased being all about finding a way around the high prices of oil and over dependence on oil. It also became about tackling greenhouse emissions. Biofuels were now seen as the panacea.
Different countries around the world have different ethanol to fossil fuels blending mandates. Most of the gasoline sold in the United States, which is the world’s leading producer of ethanol made from corn, has at least 10.2 percent ethanol, but the Secretary for Agriculture, Mr Tom Vilsack, has already tabled a proposal aimed at increasing the percentage to between 15 and 20 percent.
The US’ proposal is partially aimed at helping the country’s biofuels manufacturing sector achieve growth after years of minimum growth.
Fuel Standards in Argentina and the European Union (EU) allow for 10 percent blending, Paraguay 25 percent, Brazil 25 percent.
India has an average rate of 5 percent, but is targeting a blending percentage of 20 percent by 2021/2022. Joint research carried out by the Public Policy and Drafting firm PLR Chambers of New Delhi, the Bengaluru based Center for Study of Science and Technology and the University of Petroleum and Energy Studies, Dehradun, the increment will reduce the country’s oil importation bill at least $6.12billion in foreign exchange.
Writing in the introduction to the BP Statistical Review of World Energy of June 2016, the Group’s Chief Executive, Mr Bob Dudley, pointed out that prices for fossil fuels had fallen in 2015 in all regions of the world.
“Crude oil prices recorded the largest decline on record in dollar terms, and the largest percentage decline since 1986. The annual average price for Brent, the international crude oil benchmark, declined by 47%,” he wrote.
Mr Dudley attributed the development to what he termed as a growing imbalance between global production and consumption, but the findings of an earlier research carried out by Gal Hochman, Deepka Rakagopala and David Ziberman of the University of Berkeley, suggest that the global leaning towards biofuels has been having an effect on the oil markets.
“The introduction of biofuel reduces international fuel prices by between 1.07 and 1.10%, as well as reduces the quantity of fossil fuel (i.e., gasoline and diesel) consumed by oil-importing countries by between 0.3% and 0.7%,” the report reads in parts.
It would from the foregoing suffice to say that several countries around the world have been moving to grow their biofuels industries and save vital foreign exchange which they would have spent on importation of fossil fuels.
An increase in the number of foreign owned companies, failure to grow the export industry, a slump in commodity prices of our biggest exports means Uganda is spending far much more on imports than it earns.
According to the website www.tradingeconomics.com, Uganda has “a systemic trade deficit as a result of the country’s dependence on fuel imports” and had as of December 2016 recorded a trade deficit of $143million.
Obtaining information from the Ministry or Energy and Mineral Development proved to be a Herculean task. Emails, text messages and phone calls to the Ministry’s Communications Specialist, Mr Ibrahim Kasita, and another official attached to the Renewable Energy desk, Ms Justine Akumu, were never responded to.
However, statistics from the Bank of Uganda indicate that the country spent U$3,694.97million on imports, out of which S599.71million went towards the importation of Petroleum products, which represents 16.23 percent of Uganda’s imports.
With the coming on stream of the ethanol plant at Kakira, it means that the country has an opportunity to reduce importation of petroleum products by 20 million liters. With the pump price of Diesel at Shs2,700 and that of Petrol at Shs3,300, this could wipe either $15million for Diesel or $18.4million off our fuel importation budget.
The scenario presents good prospects of giving the Shilling much needed stability against the dollar. Perpetual depreciation of the shilling against the dollar has been undermining growth of the industrial sector as it has been sending the cost of inputs and by extension the cost of doing business spiraling.
Another plus is that blending of the fuels on the market will lead to a reduction in carbon dioxide emissions.
With the planned promotion of the use of Denatured Alcohol as a cooking fuel, it is expected that the number of people using charcoal and firewood fuel will drastically go down. Figures from the 2014 Uganda Population and Housing Census indicate that 340,000 households in Kampala alone rely on either charcoal or firewood or both.
The effect of the shift from use of charcoal and firewood to denatured alcohol in kitchens countrywide is expected to ultimately stem the pace at which Uganda’s forest cover is hacked down for wood fuel. It is estimated that Uganda annually loses about 100,000 hectares of forest cover to charcoal burners and firewood sellers.
From the foregoing, one would imagine that the Ministries of Energy and Mineral Development and that of trade are falling all over themselves to cash in, but are they?
It does not seem so. 4 months after industrial production of ethanol began in Kakira; 14 years after the September 2002 approval by cabinet of the Energy Policy and 8 years after the March 2007 approval of the Renewable Energy Policy the country is without fuel blending mandate, which means that petroleum companies are under no obligation to bled biofuels with fossil fuels.
Besides, there are no mechanisms for providing fiscal incentives to biofuels producers neither have resources been made available to the Uganda National Bureau of Standards (UNBS) to set up a testing facility! Why?
The country does not have any legislation to provide for a move into the use of biofuels.
On June 18, 2015, the then Minister for Information and National Guidance, Maj Gen Jim Muhwezi released a statement at the Media Center in which he informed the nation that cabinet had approved the Biofuels Bill, 2014 and “authorized the Minister of Energy and Mineral Development to have the Bill gazetted and introduced in Parliament for debate and enactment”.
It was however not until December last year that Minister Irene Muloni tabled the same before parliament.
On January 23 this year during the official opening of the ethanol plant, President Yoweri Museveni, expressed government’s commitment to ensuring that the bill comes into law.
“We will pass the law on blending. The MPs are here and this is something that should be done. Hon Amelia Kyambadde is also here and I want this done [passed] within six months,” he said.
Will government his Ministers implement his directive? That is the question.