A delay in the government’s support for the establishment of the South African biofuels industry has hampered growth and delayed investments, business research group Frost and Sullivan said on Wednesday.
”Although the South African biofuels markets are currently only theoretical, they offer several promising opportunities … however, delays in government decisions have dampened investments and will continue to hamper growth in the short term,” said spokesperson Patrick Cairns.
A new analysis by the company found that South African biofuels markets could earn revenues of $872-million in 2010, and as much as $1,039-billion in 2013.
According to analyst Cornelis van der Waal, the market for biofuel production in South African offers real potential.
”There is much to gain from decreased dependence on imported fossil-fuel products. Biofuel utilisation will also form the cornerstone of the government’s strategy to reduce greenhouse gases under its Kyoto commitments,” Van der Waal said.
He said that biofuels could also play an important role in stimulating economic activity in agricultural communities and boosting employment.
”As South Africa is a net importer of petroleum products, any additional local production should be encouraged. There will be significant opportunities for new and established companies to get involved in the lucrative petroleum sector that is currently dominated by a small number of large competitors.”
He added, however, that the manufacture of biofuels requires feed stock and this could potentially conflict with food production.
”It is therefore of the highest importance that a cohesive strategy is developed at a central level with contributions from all stakeholders. Current agricultural activities in South Africa are mostly geared to meet local requirements and any additional demand for the same products will increase prices and reduce availability,” Van der Waal said.
”There are various opportunities in the agricultural and production industries, but competition could become fierce, especially if government subsidies are favourable.” — Sapa