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Strategic incentives needed for developing bio-fuel industry
2008-09-03 09:44:39
By Mgeta Mganga
Calculated incentives are badly needed to support small and large-scale bio-fuel development in Tanzania, a renewable energy expert has said.
This is according to Estomih Sawe, Executive Director of the Tanzania Traditional Energy Development and Environment Organisation (TaTEDO) who has decried present institutional trends which tend to favour multinational industrial bio-fuel producers at the expense of small-scale, mostly indigenous ones.
-industry is chiefly founded on the growth of jatropha plant which produces bio-diesel. Investments into the industry have recently jolted due to global rise in prices of fossil fuel.
The cultivation of sugar cane for ethanol production is also gaining currency.
Sawe said for small-scale farmers to be fully engaged in bio fuel business, they would require special support, much so in the form of access to finance and other important inputs.
He suggested that the government should now consider creating a special fund, grants and even resolve to assist small farmers to establish their own associations and co-operatives.
Special funds could be created in ways that would support smallholder farmers’ associations and cooperative enterprises from potential exploitation from some profit-driven multinational investors.
To begin with, incentives such as tax exemptions for basic equipment for processing oil crops such as jatropha could be provided to facilitate sustainable supply of local and cleaner energy needs.
At the same time, local micro-financing services could also be sensitised to support small-scale farmers to produce and process jatropha.
International institutions such as multilateral and bilateral donors could also provide upstream grants, debt, equity and long-term financing for supporting small-scale bio-fuel activities.
He sad it was important to provide incentives with regard to large-scale and small-scale initiatives.
For instance, large-scale bio-fuel production, such as the production of ethanol from sugar as well as the activities in palm oil and Jatropha would require supportive policies and regulations in place for start-ups in order to secure investments and markets.
On the other hand, small-scale activities are currently mainly concerned with income generation in rural areas, either from oil seed crops or soap production from Jatropha oil. Activities are said to be important in poverty alleviation.
A recent assessment by the Food and Agriculture Organization of shows that Tanzania has 55.2 million hectares potential area for rain-fed crop production from the total land area of 93.8m ha.
About 10.8m ha of this area are in use for crop production, leaving 44.4m ha of land potentially available for (food and non-food) crop production.
While these figures present only a broad picture of land use, they do suggest that land availability is not likely to be a barrier to bio-energy production in Tanzania.
Tanzania has more than 30 million hectares of land classified by FAO as very suitable or suitable for cultivation of energy crops with intermediate levels of input.
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