Firm, Mera tussle over ethanol pricing model

Post was last updated: July 24, 2019

By Chimwemwe Mangazi:

GUTA—That is what is constraining us

Ethanol producer, PressCane Limited, has faulted the local ethanol pricing model, saying it is constraining its return on investment.

PressCane General Manager, Christopher Guta, said the prices are determined by the inbound landed price of petro which stands at K658 per litter.

Earlier, the company proposed that the fuel should cost 20 percent lower than petrol, despite being constrained by a number of problems in the production and implementation process.

“…that is what is constraining us as an ethanol company because, with a regulated price and continuing escalation of the cost of inputs, this is what is limiting our capability to make more investments,” he said.

He said the firm expected the price to be around $1.14 per litre and not $0.80 per litre.

PressCane is producing 14 million litres of ethanol a year which, according to Guta, is below its capacity.

“If Malawi were to produce ethanol according to demand, we should have been supplying at least 34 million litres of ethanol between us and Ethanol Company Limited in Dwanga but the two companies can only produce up to 20 million litres,” Guta said.

Reacting in an interview yesterday, Malawi Energy Regulatory Authority Chief Executive Officer, Collins Magalasi, said the ethanol industry is regulated and, as a regulator, they have to ensure 20 percent use of fuel ethanol in the country’s fuels.

“We are working with the producers in order to reduce the cost,” Magalasi said.

Petro is being sold at K868 per litre, diesel is fetching K874 per litrewhile paraffin is selling at K710.50 per litre.

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