Uganda sugar body plans $100 mln ethanol investment

KAMPALA - Uganda's sugar industry plans to invest $100 million in ethanol production within two years if the government puts policy in place on fuel blending, an industry executive said on Tuesday.

Richard Orr, chairman of the Uganda Sugar Cane Technologists' Association (USCTA), told Reuters in an interview they were pressing the government to pass legislation that would boost investment in ethanol production in East Africa's third largest economy.

"We're discussing with the government to put in place a policy to require petroleum companies to mix their petrol ... with ethanol. That would guarantee a market, so that when we make this investment we're sure to get our money back," he said.

"Ultimately, investments will depend on each individual sugar producer, but we're estimating about $100 million to be able to produce 60,000 litres of ethanol a day."

Orr said if the government gave adequate incentives quickly, the industry was capable of installing equipment and starting production within two years.

Uganda has three major sugar plants and the industry produced a combined annual total of about 112,000 tonnes of molasses, a by-product used to make ethanol, a USCTA report released in March said.

USCTA calculates the industry has potential to produce about 28 million litres a year of anhydrous ethanol, which can be mixed with 198 to 243 million litres of petrol at a 1 to 9 ratio to produce E10 fuel.

Uganda's energy ministry says the country uses 20,000 barrels of petroleum products per day.

Uganda sustained strong growth through the global economic crisis and a Reuters poll of analysts forecasts it will expand by 6.2 percent in 2010.

Foreign investor interest has also increased since the discovery of oil reserves in the west of the country in 2006.

The USCTA report said ethanol production in Uganda would result in among others, a potential 10 percent saving on the foreign exchange cost of importing petrol, reduce informal liquor production and cut emission of greenhouse gases.

Orr said if Uganda failed to provide a market for ethanol, producers had a choice of exporting it but Uganda's being landlocked posed a challenge.

source: reuters