SA Govt delays hamper biofuels investment
Delays in government decisions regarding the South African biofuels strategy and market have dampened investments and will continue to hamper growth in the short term, growth consulting company Frost & Sullivan said on Wednesday.
The company reported that the South African biofuels market could earn revenues of $872-million in 2010, and over one-billion dollars in 2013.
"While there is a delay in the development of the national strategy for biofuels, the planning and investment from the private sector has come to a halt. As long as there is no further clarity on the opportunities, it can be expected that very few new companies would be investing in this industry," explained Frost & Sullivan industry analyst Cornelius van der Waal.
The South African biofuels strategy, which was expected in mid-2007, has been finalised and submitted to Cabinet for consideration, and more details are expected early next year.
Biofuels could play an important role in stimulating economic activity in agricultural communities and boosting employment, but requires strong government incentives and mandatory blending levels.
South Africa is a net importer of petroleum products, and additional local production should be supported, as it could encourage entrepreneurs to become involved in this sector, which is currently dominated by a small number of large competitors."South Africa has much to gain from decreased dependence on imported fossil fuel products. Biofuels utilisation will also form the cornerstone of the government's strategy to reduce greenhouse gases under its Kyoto commitments," Van der Waal added.
The consultancy stated, however, that while the South African biofuels market was currently only theoretical, it was offering serveral opportunities due to the government's commitment to establishing the industry.
Biofuels Industry Development MD Fanie Brink added that delays in the release of the strategy were "very detrimental" to the industry.
He said that the level of engagement with all stakeholders, particularly the agricultural industry, which would be responsible for feedstock production, has not been adequate.
