BIOFUELS FOR TRANSPORT IN TANZANIA

(Current Situation)By J. C. Shuma

1.0 PRESENTATION STRUCTURE• Introduction• Transport Sector• Fuel and Biofuel Sector• Current Biofuel Activities in Tanzania• Agriculture Energy Crops and Forest

Resources for Bio-fuel Production• Use of By-products • Relevant Market Arrangements• Conclusion

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2.0 INTRODUCTION• Tanzania’s demand and prices for petroleum

fuels are growing at an alarming rate.• The country is currently one of the major

consumer and importer of the fossil fuel in East Africa (petroleum products accounting for 40 % of all imports).

• Since petroleum fuels are finite sources, renewable fuels, such as ethanol and biodiesel, will help to alleviate dependence on fossil fuels.

• Biofuels are ideal transport fuel extenders, because they can be produced from locally grown crops.

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• Primary drivers that foster the increase in production and use of biofuels in Tanzania include:– Escalation of Fuel Prices: The petroleum products

prices in Tanzania are increasing as per market prices.

– Air quality: transport/communication sector has grown at the rate of 6.2%, contributing not only to the fuel shortage, but also to air pollution.

– Availability of energy crops: the surplus grain, existing sugar by-products, non-edible oil crops and the need for economic development are important issues for country development.

– Efforts of reducing fuel imports in view of rising world market oil prices (currently around US$ 70 per barrel) which are hurting economies of poor countries like Tanzania

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Biodiesel and EthanolBiodiesel• Biodiesel is a renewable fuel for diesel engines

derived from natural oils. Biodiesel can be used in any concentration with petroleum based diesel fuel in existing diesel engines with little or no modification. Biodiesel is produced by a chemical process called trans-esterification whereby the glycerine is separated from the fat or vegetable oil.

Ethanol• Ethanol is a clear, colourless alcohol renewable

fuel made from the sugars found in sugarcane, sugar beets, starch grains.

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• There are several ways of making ethanol from agricultural crops.– Starch Based Ethanol Production- from different

crops such as wheat, rice, maize, potatoes, cassava etc, found in almost all regions of Tanzania

– Cellulose Biomass Based Ethanol Production-from crop residues such as rice straws, bagasse, etc. (sugar industry and large private rice farms etc)

– Sugarcane-ethanol production in the country can be processed through sugarcane –sugar route. The ethanol can also be extracted from sugarcane-sugar-molasses route. The route can be developed in sugar companies: KSC,TPC,MSC and KSC.

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Transport SectorTransport Sector Structure

• The transport sector in Tanzania is made up of roads, railways, marine and air transport sub-sectors:

– Railway: Two railway systems operate in Tanzania (Tanzania Railway Corporation (TRC) and Tanzania Zambia Railway Authority (TAZARA))

– Sea Transport: It is done through shipping. The Tanzania Harbours Authority (THA) operates ports of Dar es Salaam, Tanga, Mtwara and minor ports of Kilwa, Lindi and Mafia on the Indian Ocean.

– Air Transport :Tanzania has three international airports, Dar esSalaam International Airport (DIA), Kilimanjaro International Airport (KIA) and Zanzibar International Airport (ZIA) and more than 50 official airports and airstrips.

– Road Transport: Road transport sector has a network of about 85,000 Km. The network consist of trunk (10,300 Km), regional (24,700 Km), district (20,000 Km), urban (2,450 Km) and community (27,550Km) roads. Only 5 percent of the road network is bituminised.

• The annual amount of various petroleum fuels consumption is morethan 1.2 million, growing at a rate of 5.1%

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• Petroleum is the principal energy resource in Tanzania providing 88% of commercial energy.

• About 40% of petroleum is consumed by the transport sector.

Road Transport and Fuels

Share of petroleum product consumption of different sectors

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Road Transport and Fuels………….• Tanzania imports all its petroleum product

requirements and about 30% of the total foreign currency is spent on this important commodity.

• In 1997, the government liberalized downstream marketing to promote competition in the petroleum sector.

• The TIPER which was sole operating refinery plant was closed at the end of 1999. Within a short time, some 70 companies registered as oil marketing companies (major international oil marketing companies and many local small trading companies).

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Consumption of Diesel and Petrol in Tanzania

0.00

100,000.00

200,000.00

300,000.00

400,000.00

500,000.00

600,000.00

700,000.00

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Years

Fu

el Q

uan

tity

(M

T)

PETROL

DIESEL

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• The cost of petroleum products to the Tanzanian customer is high and few actors, which sometimes create oligopolistic behavior, in order to dominate the market and rise prices (currently an on-spot check discovered that fuel prices of unleaded petrol now range between Tshs 1,120 and 1,195 per litre. Diesel costs between Tshs 1,075 and 1,095 per litre).

• The prices have increased by 32% from year 2000.

• The impact of high costs of petroleum products on the economy is using much of financial resources on petroleum fuels and this will trickle down to other productive sectors causing low local investment difficulties, inflation, depletion of foreign currency reserve, etc 10

Annual Fuel Price Trend in Tanzania

0

20

40

60

80

100

120

1991 1993 1995 1997 2000 2001 2002 2003 2004 2005

Years

Pri

ce

s (

US

ce

ntr

es

/lit

res

)

GasolineDiesel

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Fuel Taxation

• From the table above its obvious that Petrol and Diesel are heavily taxed in Tanzania

Type of Fuel Taxes by Petroleum Products

Source: TPDC, 2004

Real Prices DUTY TOLL(SHS/LT) (SHS/LT) (SHS/LT)

Motor Super Premium (MSP) 720 146 90 20% 1195Motor Super Regular (MSR) 660 146 90 20% 1120Gasoil (GO) 659 127 90 20% 1095Industrial Diesel Oil (IDO) 659 201 0 20% 1075Source: TPDC, 2004

Type of Fuel Taxes by Petroleum Products

Market PricePetroleum Products

EXCISE ROAD VAT

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Current Biofuel Activities in Tanzania• In the country, limited efforts of

researching and developing biodiesel are being spearheaded by KAKUTE Ltd, FELISA, D1oils, University of Dar es Salaam, TaTEDO and other small stakeholders.

KAKUTE Ltd• KAKUTE disseminated knowledge of

producing and processing the Jatropha and assist smallholder farmers to produce Jatropha soaps in Arusha.

• KAKUTE produces around 1.000 kg of soaps a year and sells them in the form of pieces of 30 and 90 g each.

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• TaTEDO, in collaboration with KAKUTE Ltd in 2001 started biofuel activities with smallholders in order to disseminate knowledge of Jatropha curcus growing and processing practices at Monduli, Arusha through the Cross Borders Biodiversity Project.

• TaTEDO is still working on the development and dissemination of knowledge of Jatropha planting through other on going projects and programmes. The aim is to ensure oil from Jatropha will be produced in large amount in the future and used as alternative fuel in Tanzania.

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Farming for Energy for better Livelihoods in Southern Africa (FELISA)

• FELISA Ltd is a new company with aim of promoting biofuel production and marketing in Tanzania. FELISA fosters partnerships with other entrepreneurs, smallholder farmers and government aimed at the production of palm oil, bio-diesel and their by-products.

• FELISA has selected Kigoma Region where palm oil is a common cash and food crop.

• The following are some of the undertakings intended to be carried out by FELISA:– Management of oil seed plantation such as oil-palm plantation,– Production of vegetable oil,– Production of bio-diesel,– Extraction and refinery of oils bought from other producers,

– Promoting biofuels, research on biofuels.15

D1 Oils• D1 Oils Tanzania Limited is a Tanzanian

private company registered in 2003 dealing with plant oil particularly Jatropha curcus and Moringa ofeira.

• The main objective of the company is to create a big business and initiate the production of the biofuel products.

• The main focus is the exploitation of fuel from the above species and acquiring carbon credit for owning a large energy plants forests.

• In Tanzania, the company plans to have biofuel oil purification stations in every district. 16

Chemical and Process Engineering Department of UDSM

• Biodiesel production form vegetable oil is one of the research activities conducted by this department.

• The department came up with bio-diesel, which is an alternative renewable fuel produced from vegetable oil.

• The diesel produced for research purposes was used to run diesel engines

• Diesel engines can run on pure bio-diesel or a blend of bio-diesel.

• An alternative renewable fuel produced from vegetable oil would at least save USD 200 million used to import petroleum fuels.

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• A review of biofuel pioneers above shows that two main aspects are predominant in the development of biofuels:– NGOs working in rural areas are interested

in the income generating possibilities by the utilization of the Jatropha plant, mainly for oil for domestic fuel and soap making.

– Related government organizations, national NGOs and private companies are interested in the energetic aspect by using Jatropha oil for the large-scale production of biodiesel.

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Sugar Industries• There are four main companies:

KSC,TPC,MSC and KSC.• The potential of producing ethanol is in the

sugar industry and in the long run in the sisal industry.

• Molasses, which is one of by-products of sugar industries, can be used for production of ethanol.

• The production of molasses in four companies in past five year is 88,915 metric tons. Which could produce almost 6 million litres of ethanol

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Agriculture Energy Crops and Forest Resources for Bio-fuel Production

• Tanzania's climatic growing conditions and its arable land can accommodate production of wide variety of agricultural products

• Three classes of vegetative sources (raw materials) can be used for biofuels– Oil seed crops – Starch crops such as grains, maize and tubers

like cassava,– Sugar plants such as sugarcane etc,– Cellulose plants (agriculture residues),

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Oil Seed Plants• Oilseeds plants (crops) include both industrial

(castor seeds) and edible oilseeds (sunflowers, groundnuts, cashew-nut, sesame, copra, cottonseeds, palm seed and Soya beans).

• Of oil producing tree species, some have been evaluated and found that Jatropha carcus and Pongamia pinnata are suitable for biofuel.

• Jatropha curcus found to be the most suitable for biodiesel production.

• Jatropha is drought resistant plant and can be planted on the under-stocked land, farmers’ field boundaries to provide protective hedges, fallow lands on farmers’ holdings as agro-forestry along with agricultural crops, public lands along tracks, highways, etc.

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Oil-Producing plants has been identified in Tanzania and most of them can be used for biofuel production.

Oil Production (000 tons/year)

% Oil content Favourable climatic conditions Regions grown

Coconut 370 65 Tanga, Coast,

Cottonseeds 210 18 Tropics, Sub-tropics and Temperate climates. Tabora, Mwanza, Shinyanga, Mara, Kagera, Tanga, Morogoro, Singida, Lake zone & Coast.

Groundnuts 45 - 55 Tropics, Sub-tropics and Temperate climates. Dodoma,

Palm oil 60 43 - 51 Tropics & Sub-tropics. Tanga, Dar es salaam, coast.

Sunflower seeds 25 - >85 Tropics, Sub-tropics &Temperate climates.

Copra 45 - 75 Costal hot temperature Coastal areas.

Kapok 25 At the Coast and along coastal areas. Korogwe, Mombo, Tanga, Coast, Morogoro & Shinyanga

Cashew nuts 123 46 - 47 Lindi, Mtwara, Ruvuma, Dar es salaam, Tanga & Coast

Jatropha 18-58 33 - 60 Tropical & Sub-tropical climates. Arusha, Bukoba.

Castor bean(Ricinus communis) 20 –50 Preferring Humus-rich& disturbed ground, (Its drought resistant)

Widely spread all over Tanzania.

Pigeon wood (T. Guineensis) Higher rainfall areas, 0-200m. Found in riverine forest or forest margins.

Cape mahogany (T. Roka) 55 - 65 Well-drained, rich soils & high ground water areas. Bukoba, Mwanza, Mbeya & Kilimanjaro.

Margosa seeds (Azadirachta indica)

20 - 45 Pan-tropical in semi-arid & arid regions (withstanding drought). Very dry areas, & poor soils, 1-1,500m.

African fan palm(Borassus aethiopum)

Less dry areas of tropical Africa. In Tanzania-along the coast and along water courses.

Coastal Regions.

Peasic/Peach oil (Persia vulgaris) 40 - 50 Kilimanjaro, Arusha,22

Production Costs Structure• The costs of growing biomass are similar to

those for any agricultural crop, although the terminology differs somewhat. The basic cost categories are: – the capital cost of establishing the crop and the

much smaller cost of maintaining it until harvest; – harvesting the haulage to the fuel preparation site; – fuel preparation (chipping and drying); – transportation to the market or contracted

purchaser such as a bio-energy power plant;– overheads or fixed costs.

• In addition, there must be a sufficient “net margin” or “net income” for the growers.

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• Only 22 percent of the total areas is under private farms. If the crop is profitable, the private sector will invest in the crop production.

• A review of the distribution of large farms by regions shows that one third or more of the area in large farms is in private ownership in Arusha, Tanga, Dar es Salaam, Lindi, Iringa, Singida, Shinyanga, and Mwanza.

• Around 75 percent of the arable land in Tanzania is not under cultivation.

• However, availability of land in other regions for private investments in energy crops is as well possible.

• Energy crops also can be grown by smallholder farmers if they are assured of the availability of crop produce market.

Size and Structure of FarmsSize and Structure of Farms

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Use of by-productsBiodiesel Production

• The by-products of bio-diesel production from Jatropha seed are the seed oil cake and glycerol.

• Glycerol is good for soap making • The seed oil cake can form a good

compost rich in plant nutrients. • It can also yield biogas and produce

slurry (compost). 25

Use of by-products……Ethanol Production

• The two major by-products of ethanol production from sugarcane include bagasse and spent wash.

• Bagasse is utilized presently for boiler fuel needed for steam raising

• It is possible through anaerobic digestion to utilize the spent wash in production of two valuable commodities one methane rich fuel gas and another nutrient rich bio-sludge suitable for soil nutrition

• The methane fuel gas production can meet the fuel requirement as well as power generation for electricity derives through co–generation.

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Relevant Market ArrangementsBiodiesel Marketing

• Biodiesel can be mixed easily in any proportion with conventional diesel and by the virtue of its high density it can easily be blended with petroleum diesel( up to 20% for oil engines and 100% for new engines).

• Its handling and storage is just like petroleum diesel and no separate facilities are required.

• There is need of further research on the role of marketing companies in distribution, pricing, taxation, interregional movement and the direct and indirect impact of bio-diesel.

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Relevant Market Arrangements……..Ethanol Marketing

• The advantage of ethanol as blends in motor fuel is that they are containing 35 percent of oxygen and is renewable

• There is need of proper marketing arrangements for distributing ethanol from production areas through distributing companies to the fuel filling stations.

• Blending of petroleum fuels with ethanol will be done at the depots and then distributed to the fuel filling station for disposing to the customers.

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Policies, Strategies and Targets

• There are yet specific targets set for biofuel products marketing in Tanzania.

• Policies, strategies and regulations need to be in place for biofuel development and marketing in Tanzania.

• There is need of having targets, which will attract new entrepreneurship in the biofuels businesses and be the catalyst of involving different actors in the liquid fuels subsector.

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Conclusion• There is high potential of producing biofuels in

Tanzania. • This can be partly obtained from biodiesel sources

or partly from ethyl alcohol sources. • There are several actors, which can be involved in

the biofuel development. These include producers, private companies, NGOs, oil companies and regulatory bodies.

• There is a need to conduct more studies and scientific researches in order to get way through on how biofuels could be developed in Tanzania.

• Biofuel development is expected to realistically reduce amount of foreign currency used to import oil in Tanzania.

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THANK YOU FOR YOUR ATTENTION

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