As the price of fuel increases on the international oil market, Ethiopia has set its sights on ethanol and bio-diesel to guarantee the supply of affordable fuel in the future.

According to a troubling study that was done by the Ministry of Trade and Industry (MoTI), the increasing international demand for energy sources does not guarantee that the international supply will be constant in the future. The study focused on the two alternatives and their viability in the country.

In response to the potential crisis – shared by countries all over the world - the Ministry of Trade and Industry, the Ministry of Agriculture and Rural Development, and the Ministry of Mines and Energy discussed the issue and decided to form a technical committee. It is to be led by the Ministry of Mines and Energy through its Energy Development Department.

Sources from the Ministry of Trade and Industry told Fortune that “the government would like to see the sector grow in leaps and bounds the way we observed in the floriculture industry.”

Specifically, the study addresses the type of soil and the wide area of land needed for the jatropha, a plant used in biodiesel production. 

Companies that have already entered the jatropha/bio-diesel sector are Energy Seed Plc, FRIEC Green power, Biofuels Ethio Plc, and the National Bio-Diesel Corporation. These companies have already started work in the Afar, Oromia, Benshangul Gumuz and Gambela Regional States.

The National Bio-Diesel Corporation Plc, a company which was established by two Germans and an Ethiopian, received an 80,000ht plot of land in the Benshangul Gumuz Regional State. The company is expected to invest 60 million dollars in the sector.  The Corporation hopes to produce 150 million litres of Bio-Diesel a year, covering 15pc of the country’s fuel consumption.

“There is no land problem in the country, it is an appealing option as it is a labour intensive sector” an official from the Ministry of Trade and Industry told Fortune.

The Energy Development Department in the Ministry of Mines and Energy is working to deliver regulations in the coming three months.

According to the Ethiopian Petroleum Enterprise, the country consumed 724,000tn of diesel and imported close to 1.5 million tonnes of petroleum products in the 2004/2005 fiscal year.