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A potential goldmine

Sailosi Batiratu
Sunday, December 09, 2012

WE are sitting on a potential goldmine, is how Department of Energy director Peceli Nakavulevu describes the molasses produced during the sugar milling process as a biofuel source.

Nakavulevu had last month highlighted that only 10 per cent of all the molasses produced was being used locally.

Before tapping into this goldmine, deputy director Pranil Singh says it is important to determine "who the players are in the market and what their roles and responsibilities are".

Singh says they, at the Department of Energy (DoE), as part of the national energy policy and their work in the strategic area of energy security, oversee and facilitate the development of the whole biofuel industry.

In terms of the actual implementation of biofuel projects, that is something the DoE believes the private sector, and in the case of molasses, the Fiji Sugar Corporation could take up. They at the DoE work on policy and standards for the blend. They also have the standards for ethanol which have been passed by the Trade and Advisory Committee. These also have been gazetted.

He said: "Those things have already been passed but however are still voluntary. The service stations at this point in time do not need to sell this product.

"We also have amended the Gasoline Order, this is because we usually blend the ethanol with gasoline. Likewise, we blend biodiesel with diesel. We blend 10 per cent ethanol with gasoline to get what we call the E10 blend."

Singh said there were a number of factors they were looking at before the sale of biofuels at service stations and retail outlets was made mandatory.

He said one aspect was for the actual industry itself developing with private sector participation and legislation being put into place. Singh said the issue was being looked at from several angles.

Singh says we need at least 10 million litres of ethanol for the E10 blend which he says, is a considerable volume.

"In 2010, FSC produced about 135,000 tonnes of molasses. If we used all of this, we would get 34 million litres of ethanol. That is more than what we need," Singh said.

Responding to emailed questions, FSC executive chairman Abdul Khan said: "In consultation with government and the Department of Energy, we are looking at using molasses to produce ethanol which can be used as a blend with motor fuel."

He said FSC and government had been in discussions for a few months now.

"The talks have progressed very well and we are now at the point of making the appropriate decision in regards to a detailed project study for ethanol production from molasses."

On whether they would need to invest in new machines, Khan said: "At this stage, we have not decided as to who the investors will be. This will be agreed once we have completed the detailed study."

Khan said FSC had carried out studies to assess the viability of ethanol production.

"Our initial evaluation at the pre-feasibility study stage has shown that converting molasses into ethanol, especially for our use is commercially viable. Although selling molasses overseas, at times, may be lucrative, we are at the mercy of our overseas buyers and the price volatility on molasses in the world market.

"To give you an example, in the last 18 months, we have seen molasses price vary from $US75 to $US130 per tonne. Whereas converting our molasses to ethanol for local consumption gives us a long term price stability as well as profitability. Also it is worth noting that based on our long-term strategic forecast, we will still have surplus molasses after ethanol conversion, to sell in the world market and to optimise our revenue from molasses.

"If for example we adopted a standard of E10 blend, we will roughly save 10% of our transport fuel import reducing our foreign currency outflows and stabilising the price of fuel in the country."

Singh says a $1.6m-$2m lab is being set up at the Institute of Applied Science at the University of the South Pacific. This lab will test whether fuels produced locally are of international standards.

Nakavulevu says, that to understand the reason behind their work, it is important we ask ourselves why we are trying to move in this direction.

"In 2000-2003, the price of oil was sitting at $US30-$40 a barrel. In 2008 it moved right up to $US140. It has fallen and is hovering at around $US100. It will not come down," he said.

"That made the concept of biofuels and biodiesel an attractive option for Fiji.

In terms of dollar value, our fuel import bill was around $200-$400 million. Now it's around $1 billion. In 2008 it went up to $1.2 billion. Last year it was $1.1 billion. Those are the figures we are talking about.

"And we look at those figures in macro terms, it actually takes away what could have been used for better social services, money that could have been used for economic development.

"That is why it is essential for Fiji to move down this road whether we like it or not. This is where we can get funds for socio-economic development.

"That is basically the idea behind all the moves for biofuel."

As part of this idea, there are mills on the islands on Koro, Cicia and Rotuma producing biodiesel.

Asked as to how successful these mills had been, Nakavulevu said one had to understand there "large fluctuations in price in the copra industry".

"With this project coming online, it has given the copra industry a new impetus in terms of economic activity.

"That is why government is going back and looking at diesel generators installed as far back as the 1970s. The issue now is trying to get back and the strategy now is using coconut as the fuel for their generators.

"We also have companies in the urban centres getting their hands on those commodities and retailing them in the urban centres. So there is now a market where money changes hands in the islands."

Singh says each mill can produce 250,000 litres of biodiesel.

Mills are however not operated at full capacity. They each produce around 140,000 million litres and the surplus is sold to companies on the mainland.

There are six further projects in the construction stage among them sites at Moala, Matuku, Rabi and Gau.

Singh said intensive feasibility studies were carried out by DoE staff before the projects were implemented.

"They actually go out to the island and look at the copra demand on the islands. They start with a desk top study and depending on the results they go out and do a full scale feasibility study."

There were about 10 feasibility studies and six projects were deemed viable.

As Nakavulevu said: "The essence here is to beef up security in terms of energy."

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