Bio-fuel as an Alternative Fuel

In light of the recent price hike for oil based fuels the need for alternative fuel sources such as bio-fuel will increase exponentially over time. This is particular so if the price per barrel of oil continues to rise past current record high levels of USD 135. To this end the Minister of Energy and Mineral Resources has released a Draft Regulation setting out issues related to the commercial exploitation of bio-fuel as an alternative fuel source.

The main features of the Regulation relate to the mandatory use of bio-fuels, the permissible mix ratios, and export.

Bio-fuels in this Regulation include bio-diesel and bio-ethanol. Both must be produced using sources other than oil based fuels.

For those companies that supply and or use oil fuels there is an obligation to utilize bio-fuels starting at a limit of 2.5% of the oil based fuels used and this obligation is to ultimately reach a limit of 10%. For those companies that have a mandatory bio-fuel use system in place and that system is used consistently, then a system of facilities and incentives may be provided to them. The exact nature of these facilities and incentives are to be further regulated in accordance with the prevailing law.

For regions where there is a source of bio-fuel that can be exploited then these regions are to be developed into self-sufficient energy villages.

The Director General is to stipulate all bio-fuel standard quality specifications. A formula will be determined for pricing of bio-fuel with regard to distribution and supply for industrial use. However, where bio-fuel is being bought and sold as a commodity then the price will be whatever the market can sustain.

The Regulation goes into considerable detail with respect to the applicable licensing procedures.

The sanctioning provisions contained in the Regulation are standard administrative sanctions allowing for written warnings, suspension of activities, and ultimately cancellation of any licenses issued.

The Regulation will come into force immediately on its enactment.