by Sydney Masinga

The South African towns of Hoedspruit and Ogies in Mpumalanga will benefit from a R3.2 billion (approx $450m) biofuel project, funded by the Industrial Development Corporation (IDC) and the Central Energy Fund (CEF).

Hoedspruit and Ogies are two of five towns in South Africa identified by the IDC as investment areas in terms of biofuels production. The other three towns are Cradock in the Eastern Cape, and Makhathini and Pondoland in KwaZulu-Natal.  

IDC project manager Noel Kamrajh said this week that the projects in the Eastern Cape and Mpumalanga were currently at a detailed engineering study level. "Both studies are due for completion in September, and construction is likely to start in January next year," Mr Kamrajh said.

The Hoedspruit plant will make 100 million litres of biofuel from sugar cane in the first year, while the Ogies plant will make 150 million litres from maize. Mr Kamrajh said as part of the community empowerment strategy, maize would be bought from local farmers and traders.

The Cradock plant will produce 90 million litres of biofuel per year from sugar beets, while the Pondoland project will produce 150 million litres from sweet sorghum and sugar cane. The Makhathini plant will produce 100 million litres a year from cassava and sugar cane. Kamrajh said the towns would probably produce 1 billion liters of biofuel a year and contribute 1.3 percent to the gross domestic product. The biofuels will cost between 50 to 70 US dollars a barrel.

The IDC will have a 49 percent stake in all the projects while the CEF and outside partners will share a 51 percent stake.

The biofuels sector is among those prioritised for development by the Accelerated and Shared Growth Initiative for South Africa, including tourism and business process outsourcing. AsgiSA plans to raise annual economic growth to 6 percent between 2010 and 2014, as well as halve poverty and unemployment by 2014.