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South Africa: biofuel subsidy unlikely, says minister

South Africa is unlikely to introduce subsidies to support a biofuels programme that has been billed as a lifeline for the struggling farming sector, a cabinet minister said on Monday.
The Southern African Biofuels Association says it needs between 2 billion rand and five billion rand a year from the government to get a capital intensive industry off the ground.

Science and Technology Minister Mosibudi Mangena said lending support to the renewable energy industry might spark an outcry from farmers, whose fortunes have waned after a massive cut in state subsidies in post-apartheid South Africa.

His statements square with broader free-market economic policies that have taken hold under President Thabo Mbeki, who has also made a tight fiscus the hallmark of his rule since 1999.

"My suspicion is government will not give support but will give guidance as to what is desirable and what is not desirable," Mangena told reporters at a meeting of the International Society of Sugar Cane Technologists.

"In the South African environment there are all sorts of factors to be considered. For example... the farming community has been asking for subsidies for quite a while now and you know there are no subsidies."

He added, however, that such a decision had not been taken yet and said biofuels legislation should be before parliament "very soon" after further consultation with the industry.

Mangena also said officials had started to question the wisdom of using maize as a major source for renewable energy.

Land officials offered biofuels as part of a rescue plan for maize farmers two years ago when a surplus maize harvest pushed prices to four-year lows. But since then, prices have picked up and for the second consecutive season, South Africa faces a poor maize harvest, raising fears of food security, Mangena said.

"Some of the questions being asked are: if we go into production of ethanol from sugar and maize, what is this going to mean for food security?," he said.

"Environmentalists are knocking at the door, making their point that they don't think this is the direction we should be moving as a country."

South Africa wants biofuels to provide up to 75 percent of its renewable energy needs by 2013, as it joins a global drive for cleaner energy alternative to fossil fuels and tries to create new markets for the agriculture industry.

Additional information:
News date: 30/07/2007

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