Try Biofuel Investment For Multiple Income Streams

0

Everyday, millions of litres of used cooking vegetable oil are wasted and flushed down the sink in home kitchens, restaurants and hotels around the world. What a waste! Especially as all that used oil can easily be converted into biodiesel, a fuel just like ordinary diesel, could power trucks and machinery.

Biodiesel is a cleaner and better performing fuel than diesel, and it’s a surprise it’s not very popular in Africa yet.

The waste is set to be converted to wealth as the Nigerian National Petroleum Corporation (NNPC) last week, signed a Memorandum of Understanding (MoU) with the Ondo State Government to establish a 65 million litres per annum biofuel plant in Okeluse, in Ondo State.

Group Managing Director (GMD) of NNPC, Mr. Maikanti Baru, said the move to establish the biofuel plant in Ondo State was aimed at ensuring unimpeded supply of petroleum products and safeguards the environment through reduction of carbon emission.

The move by the NNPC and the Ondo State Government to partner on biofuel production was set to open a new vista of investment opportunities for indigenous businesses as they could equally commence moves to start up biofuel production plants in a bid to create jobs and wealth.

What is biofuel/biodiesel

Biofuel is a type of fuel which energy is derived from biological carbon fixation. Biofuels include fuels derived from biomass conversion, as well as solid biomass, liquid fuels and various biogases. Similarly, bio-fossil fuels also have their origin in ancient carbon fixation.

Biofuels are gaining increased public and scientific attention, driven by factors such as oil price hikes, the need for increased energy security, and concern over greenhouse gas emissions from bio-fossil fuels.

Biodiesel is very different from the ‘normal’ diesel many of us know. The diesel we’re used to is produced by refining petroleum (also known as ‘crude oil’). Crude oil, which is classified as a ‘fossil fuel’ or ‘non-renewable fuel’ can only be found deep beneath the earth’s surface, from where it is recovered and refined into several products, including petrol (gasoline), kerosene, and diesel.

Biodiesel is not in any way related to, or made from crude oil. Unlike ordinary diesel, biodiesel is a renewable and clean-burning type of diesel that is made from vegetable oils. Yes, vegetable oils! It can be made from most types of vegetable oils including soybean oil, canola oil, palm oil and most other popular oils.

Why biodiesel is becoming popular across the globe

According to smallstarter.com, biodiesel is indeed a revolutionary type of fuel that is already shaping the energy options for the future.

Based on research and findings, it said there are three top reasons why the admiration and popularity of biodiesel is growing across the world, adding that as entrepreneurs, it’s important that they understand the market factors that are behind the product in order to develop a viable business model that can make money.

The first reason according to smallstarter.com is that, the world wants to reduce waste and recycle more, explaining that, in today’s world, resources are becoming limited, and scarce. With a large global population and fast developing economies, both individuals and businesses are looking for more ways to reduce waste. This is why reuse and recycling have become a big deal nowadays.

The next reason is that,there is a growing preference for cleaner and eco-friendly fuels because the carbon emissions from fossil fuel products like diesel, petrol (gasoline) and kerosene, are the biggest contributors to the greenhouse effect, which is widely responsible for global warming and the adverse climatic changes that are affecting our planet.

Biodiesel has several distinct advantages over ordinary diesel. Biodiesel reduces net carbon dioxide (CO2) emissions by up to 78 percent on a life-cycle basis when compared to diesel.

On top of that, biodiesel is biodegradable and non-toxic (has a low sulphur content and doesn’t contain carcinogens), making it more sensitive and relatively harmless to the environment.

It is no surprise that the developed world has embraced biodiesel and is gradually increasing its use as a transportation fuel. In most parts of the USA, diesel sold at retail outlets is blended with a minimum of 5 percent biodiesel. In Germany, it’s 7 percent. The same practice exists in most parts of the European Union and Canada.

As the pressure to further combat climate change increases around the world, it is expected that the volume of biodiesel that is blended with ‘normal’ diesel will increase. Sometime in the future, cars and trucks could run on 100 percent biodiesel.

The last reason is that, more countries want to reduce their dependence on crude oil productsIf we have because excessive dependence on crude oil, especially from foreign sources, is a very risky situation.

Over the past decade, conflict, politics and uncertainty have made crude oil prices very unpredictable. Since most countries around the world have to import petroleum products from foreign sources, the impact of high oil prices instantly affects daily activities, especially the local economy.

To avoid any future surprises from the unpredictability of global oil prices, more countries around the world are looking at locally accessible energy sources to shore up their supplies and protect themselves from oil price shocks.

The Zambian experience

Mutoba Ngoma is a young Zambian entrepreneur and Founder of Tapera Industries, a small business based in Lusaka, the country’s capital. Several years ago, when Zambia was experiencing severe fuel shortages, Mutoba dabbled into biodiesel and became one of the first entrepreneurs on the continent to exploit the promising potentials of this fuel.

From a small operation which he started in his backyard with capital borrowed from his father, Mutoba was producing about 200 litres of biodiesel per month from the waste vegetable oils he collected from local households and restaurants. Today, his production has grown to 3,000 litres of biodiesel which he sells to local customers who use the fuel to power trucks and machinery.

According to a CNN interview , Mutoba says his business makes about $15,000 per month at the moment. Interestingly, he has found another use for the byproduct of his biodiesel production. He uses the waste glycerin to make organic soaps which have become an unexpected but promising revenue stream for his company.

Nigeria lags behind

Ironically, while other countries of the world, including Zambia have taken the front seats in biodiesel production, Nigeria is yet to tap into this money spinning venture.

More worrisome is the fact that 14 years ago, Engr. Funsho Kupolokun,who was the then GMD of NNPC, had mooted the idea of exploring the opportunities in biofuel, while equally reeling out the plans of the Corporation in this regard, which he said was capable of generating about $150 million to the country yearly.

Regrettably, none of those plans targeted at deriving fuel from sugarcane and palm-oil have seen the light of the day, despite the fact that he disclosed that the NNPC, had got a grant of 70,000 Euros from Renewable Energy, Energy Efficiency Partnership (REEEP) from Germany to support detailed feasibility study at the target locations.

Kupolokun had a lecture titled “Energizing Agriculture through Gross Sectorial Linkages with the oil and Gas Industry” delivered at the Convocation ceremony of the Federal University of Agriculture, Makurdi, had stated that the bio-fuel project which is part of the country’s alternative energy development strategy is geared towards utilising our agricultural potential in cassava and sugar cane to produce ethanol that can serve as a good alternative to petrol currently in use.

He had explained that under the initiative, two types of automotive fuel are to be developed, namely ethanol fuel and palm oil diesel. The ethanol he said, was derivable from processed cassava or sugarcane while the palm-oil diesel is produced by chemical process which remove glycerin and can be used in any concentration with petroleum based diesel fuel with little or no modification.

But, today, non of those plans targeted at deriving fuel from sugarcane and palm-oil have seen the light of the day, despite the fact that he disclosed that the NNPC, had gotten a grant of 70,000 Euros from.

Will Baru get it right?

The intention of Baru to partner with Ondo in the biofuel initiative may not be a bad idea afterall, having explained that the project was not to be funded 100 percent by NNPC as some investors were also bringing in Foreign Direct Investment (FDI) into the country for the project.

But beyond the rhetoric’s of the NNPC not taking 100 percent control of the project, the fact that the same concept had failed under the watch of NNPC in the past may be not be encouraging.

On the benefits of the project, Baru disclosed that the construction of the plant and the production of cassava feedstock could create at least one million direct and indirect jobs.

Other benefits, according to him, include reduction of fuel import, reduction of greenhouse gas emission to combat global warming, and boost in the production of animal feeds from by-products of the plant.

The GMD also allayed fears of any possible negative impact of the plant on the supply of cassava-based foods for human consumption, stressing that the cassava that would be used for the biofuel project was a special breed that would not be in competition for human consumption or interfere with the activities of farmers cultivating other breeds of cassava or indeed other crops.

“Your Excellency, we have already discussed with you and you have agreed to make 15,000 hectares of land available towards the cultivation of this cassava. It will, of course, in the process invite people who are used to farming cassava as well as new entrepreneurs who want to go into that business to participate in the cultivation of the cassava that we are going to use for the production of the fuel ethanol.

He disclosed that the biofuel project would be fitted with a 40 megawatts electricity plant that would also supply power to the host communities.