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AFRICABIZ VOL 1- ISSUE : 32
DECEMBER 15, 2001 - JANUARY 14, 2002
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Editor: Dr. Bienvenu-Magloire Quenum
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A WORD FROM THE EDITOR


Dear visitor and international investor,


We warmly welcome you, if this is your first visit to Africabiz Online - The ultimate newsletter on trading and investing in 49 sub-Saharan African countries. If you are a regular and faithful reader, welcome back.

If you are a regular and faithful reader, welcome back.

Crude oil price being - since March 1999 - fluctuating between US $ 20 - US $ 30, sub-Saharan African countries, particularly those deprived from oil resources and mostly the landlocked ones, are burdened with huge importation bills of Crude Oil or Gasoline. They are allocating a too large portion of their meager financial resources to catering for their vital needs for energy.

This is a very bad situation as financial means burnt into gasoline are not available for investment into other profit making sectors capable of boosting the economic development : Agriculture, Industry and Services as here exposed.

In order to contribute to finding adequate solutions : a- providing the necessary energy to powering the economy; and b- to efficiently use that energy to increasing the economic growth rate beyond the double-digit growth range - the prerequisite for a take off of the economy as here extensively exposed - we are introducing you, in this delivery, to "Ethanol As Bio-fuel And Foreign Exchange Saving Economic Activity" below exposed in the Business Opportunities in Africa' section.

This delivery about Ethanol as bio-fuel stands as a first ingress into the energy dilemma facing African countries in their quest for a better standard of living. The energy problem shall be addressed in the near future more thoroughly with a review of alternatives to classic means of generating power for the economic development in Africa.

HAPPY AND SUCCESSFUL BUSINESS YEAR 2002

We at AFRICABIZ ONLINE wish you and your loves ones a very festive Yule 2001-period; a happy and prosperous business year 2002.

Click here to review Contributor's Guidelines. Your contribution / economic articles / technology breakthroughs on "How Africa could bridge the developing gap" are welcome.


Many thanks for dropping by and see you here on January 15, 2002.

Dr. B.M. Quenum
Editor of AFRICABIZ
Contact Dr. Bienvenu-Magloire Quenum

BUSINESS OPPORTUNITIES IN AFRICA


SORGHUM: AN INCOME BUILDING POWER FOR AN AFRICAN COMMUNITY.

PART III: ETHANOL/ALCOHOL PRODUCTION AS BIO-FUEL/RENEWABLE ENERGY AND ALTERNATIVE TO GASOLINE

- Several business opportunities - component parts of the Integrated Developing Scheme described in Africans, Stop Being Poor! are listed in following table.

a- SHEA BUTTER (Issues 5, 6, 7, 11, 12, 13)
b- BLUE GOLD (Issues 14, 15, 16, 17, 18, 19)
c- FREEZE-DRIED PAPAIN (Issues 20, 21, 22 and here)
d- KENAF (Issues 23, 24)
e- VEGETABLE OIL (Issues 25, 26, 27 and 28)
f- CEREALS (Issues 30, 31)

In delivery N° 30 an introduction to Sorghum - a "Life saver" according to a Chinese saying - was exposed; and we stated - due to the several interesting industrial transformations / possibilities offered by sorghum - that "Any African country which is really serious about boosting up its economy should consider diversification into Sorghum development".

In issue N° 31 a pilot plant to producing sorghum beer was considered.

As shown on the graph
here available one can see that Alcohol / Ethanol is the resulting product if Sorghum Beer fermentation is carried out to finish.

To our knowledge, apart from South Africa, Click here for countries briefs, there is no Ethanol production plant established in any other sub-Saharan African country.

Adon on November 23, 2002: We received on October 25, 2002 a feedback from Mr. Francis X. Johnson of the Stockholm Environment Institute, who points out that:

Malawi had been continuously producing ethanol and blending it with gasoline since 1982. Zimbabwe began producing and blending in 1980, although that distillery has since shifted over to "potable" ethanol for export rather than blending. We thank Mr. Johnson for his contribution.

It is important also mentioning that Equatorial Guinea commissioned end of 2001, at Bioko, an LPG/Methanol plant, which processes gas piped ashore from the Alba field. The plant is designed to produce 19,000 barrels of methanol for export to Europe, USA and Far East.

That is really an aberration when one knows that:

1- There is a huge market in sub-Saharan African countries for Ethanol which is actually imported from overseas for hospitals and clinics operational needs; and for industrial maintenance purposes.

2- Ethanol is also a versatile product necessary for the establishment of a powerful chemical industry.
It is used to producing a long list of industrial chemical products and by-products. It is a highly performing solvent for agro industries preparations. In short, one can say that if there is no ethanol supply, the establishment of a diversified chemical industry is not possible.

3- Ethanol is an excellent bio-fuel to powering motor engine either as a- pure product (Early Ford T models' motor engines were designed to run on pure ethanol) or b- as an additive to gasoline with a blending level up to 85 % content of ethanol (more than 4 million vehicles in Brazil are running such a mixture)

ETHANOL PRODUCTION AS FOREIGN EXCHANGE SAVING ECONOMIC ACTIVITY FOR OIL DEPRIVED COUNTRIES

Let's consider point 3 above listed: Ethanol as bio-fuel blended with gasoline and evaluate the resulting saving for African countries.

- 1- Historically, production of ethanol was limited to using sources of sugar that were available in soluble forms, such as sugar (sucrose), molasses from sugar cane, or fructose from the corn plant.

Nowadays, new technologies allow for the production of ethanol from agricultural residues (straws, corn stalks and cobs, bagasse, cotton gin trash, palm oil wastes, etc.), crops grown specifically for their biomass (grasses, sweet sorghum, fast growing trees, Kenaf, etc.), paper (recycled newspaper, paper mill sludge's, sorted municipal solid waste, etc.), wood wastes (prunings, wood chips, sawdust, etc.), and green wastes (leaves, grass clippings, vegetable and fruit wastes, etc.).

These new production methods/development are very significant: for example, where one acre of sugarcane produces about ten tons of edible sugar and three tons of molasses, it also produces (in the form of leaves and stalks) an additional twenty to twenty-five tons of non-edible materials which were left over in field after the harvest of the stalks. With the new technologies these byproducts could be easily and efficiently transformed into ethanol.

Table N° 1 below lists some feedstocks - which could be used to producing ethanol - and their relative production costs (Source available here)

TABLE 1
ETHANOL FEEDSTOCKS AND PRODUCTION COSTS US$

 BIOMASS MATERIAL

 $ / liter for feedstock cost alone (high end of range)

 $ / liter for feedstock cost alone (low end of range)

 $ / liter processing cost (high end of range)

 $ / liter processing cost (low end of range)

 Total $ per liter(high end of range)

 Total $ per liter(low end of range)

 Bagasse

 0.22

 0.11

 0.44

 0.25

 0.66

 0.36

 Molasses

 0.13

 0.13

 0.27

 0.14

 0.39

 0.27

 Prepared cane

 ....0.29

 0.16

 0.44

 0.25

 0.73

 0.40

 Leafy tops and cane trash

 0.14

 0.17

 0.44

 0.25

 0.37

 0.32

 Unburned sugarcane

 0.27

 0.14

 0.44

 0.25

 0.70

 0.39

 Sugarcane varieties

 0.25

 0.13

 0.44

 0.25

 0.68

 0.38

 Napier Grass

 0.38

 0.20

 0.44

 0.25

 0.82

 0.46

 Sweet Sorghum

 0.22

 0.11

 0.44

 0.25

 0.66

 0.37

 Eucalyptus

 0.36

 0.20

 0.44

 0.25

 0.80

 0.44

 Leucaena

 0.53

 0.28

 0.44

 0.25

 0.96

 0.54

Recycled  Newspaper

 0.04

 0.01

 0.44

 0.25

 0.47

 0.27

 Municipal Solid Waste

 0.10

 0.00

 0.44

 0.25

 0.55

 0.25

Let's take the average feedstock plus production cost which costs less: US $ 0.40.

Now that we have an estimate of feedstock and production cost, we may apply 30% (the standard in the industry) above it for profit margin and distribution costs (packaging, tanking and so on) which gives us a distribution pricing in the range of US $: (0.40 x 30%) + 0.40 = 0.52 per liter of Ethanol; and a selling price in the range of US $ 0.624 per liter. To be compared to actual gasoline selling prices in African countries. Click here for a brief study dedicated to a landlocked country: Burkina-Faso

- 2 - In short Crude oil prices remained above US $ 25 per barrel in nominal terms for most of 2000 and have been near US $ 30 per barrel in the early months of 2001. And in this December 2001, it is fluctuating between US $ 20 and US $ 25.

Prices were influenced by the disciplined adherence to announced cutbacks in production by members of the Organization of Petroleum Exporting Countries (OPEC). OPEC's successful market management strategy was an attempt to avoid a repeat of the ultra-low oil price environment of 1998 and early 1999.

So one could reasonably assume that OPEC's members and non members are going to stick to the successfu
l market regulating strategy; and therefore the price of Crude Oil will remain near to US $ 25 per barrel (159 liters) for many years running.

- 3 - According to The World Oil Markets/International Energy Outlook 2001 Report - available here - Oil demand in Africa is projected to grow at an average annual rate of 3.6 percent, from 2.5 million barrels per day in 1999 to 5.4 million barrels per day in 2020. And considering the price evolution above outlined in point 2 the demand will continue to exerting heavy drain / burden on national budgets of most sub-Saharan African countries.

- 4 - Multiply quantities exposed in point 3, first by 365 days; and, second, by US $ 25 to see how much burden is exercised on the meager financial resources of most African countries.

A very big chunk of their national budget is simply "burnt away" through the importation of crude oil; and therefore not enough financial resources are left over to contributing to the necessary increase of the economic growth rate as
here extensively exposed.

When one takes into account points made above 1-2-3-4 it is obvious that the development of an Ethanol / bio-fuel industry will be a real bonus for any African country. The staggering figures of bills linked to Crude Oil importation could be minimized if Ethanol / Bio-fuel is blended with gasoline from 10 / 90 ratio-mixture to 85 / 15 as already performed in Brazil. Click here for a brief study dedicated to a landlocked country: Burkina-Faso

In addition to foreign exchange savings, the following non-comprehensive benefits could be listed for the sustained economic development of any sub-Saharan African country which setup this ethanol / bio-fuel venture as viable alternative to fossil based fuel:



- Development and use of locally-produced, renewable fuel, and reduction of demand for imported petroleum.

- Boosting of local agriculture productions and additional markets and revenues to farmers; leading consequently to the increase of rural folks purchasing power as here extensively exposed.

- Beneficial environmental impact through the usage of organic municipal solid waste materials to generating a higher value end-product.

- Low level of carbon dioxide emitted by motor engines and then preservation of the quality of the atmosphere. Etc.

In next delivery (Issue 33 - January 15 - February 14, 2002) we shall pursue this series on Ethanol / bio-fuel and consider: a) The most suitable feedstock. b) The energy balance of Ethanol and c) Economic indications for a small scale plant to producing Ethanol.

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