SA’s biofuels funding incentive is being revamped over concerns that it is unaffordable after a halving of global crude oil prices over the past year, officials said on Tuesday.
A net importer of crude, Africa’s most advanced economy wants biofuels initially to meet 2%, or about 400-million litres, of the country’s annual fuel consumption to wean itself off oil imports and improve the trade balance.
However, regulatory uncertainty centred on financial support incentives to manufacturers has choked investment since the approval of a national biofuels strategy in 2007.
"There is a fiscal risk posed by the subsidy under the circumstances of a declining crude oil price," said deputy director-general of energy policy and planning Ompi Aphane.
"The extent of the subsidy increases tremendously because of the low prevailing price, because the model works much better at very high crude prices," Mr Aphane said.
Instead of a first-come, first-served model, the new proposed subsidy will see producers compete directly against each other based on their individual needs.
"You tell us how much subsidy you need and that would be a competitive element in determining who gets the subsidy. That is a major departure," Mr Aphane said.
Prospective producers are wary.
Phillip Bouwer, CE of Mabele Fuels, which plans to build South Africa’s largest sorghum-to-ethanol plant at a cost of R2.5bn, said it seemed the government wanted to replicate its successful renewable energy bidding scheme in other sectors.
"They are using a one-size-fits-all approach and that may be problematic," he said.
To read more at: http://www.bdlive.co.za/business/energy/2015/08/11/cheaper-oil-forces-sa-to-rework-biofuels-subsidy
No comments:
Post a Comment