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Biofuels face high costs, tax hurdles in CISBy Aleksandras Budrys MOSCOW, Sept 26 (Reuters) — High costs, taxes and bureaucracy are stifling the development of a biofuel sector in the former Soviet Union, officials say, despite the launch of plants in Kazakhstan and Ukraine. Kazakhstan has the potential to produce about 5 million tonnes of bioethanol and biodiesel, Liliya Musina, deputy head of Kazakh state firm National KazAgro Holding, told a biofuels conference. She did not say when this might happen. One of the country's two biofuel plants has not yet sold a single litre due to taxation problems in Russia, while in Ukraine farmers can make more profit exporting rapeseed than using it for biodiesel. «After selling a tonne of rapeseeds, farmers could buy a tonne of standard diesel fuel and still have money left. Current prices stimulate rapeseed exports rather than processing,» said Serhiy Feofilov, general director of UkrAgroConsult consultancy. Volatile crude oil prices have pushed consumers worldwide to use more green fuels from renewable resources. In the former Soviet Union, bioethanol can be produced mainly from grain and biodiesel from oilseeds, mainly rapeseed. «It is important for Kazakhstan, which has a significant grain surplus and idle land reserves, to be an important player on the world market,» Musina said. She said the government would this year finance feasibility studies for various biofuel plants and assume 50 percent of the cost of building two biofuel plants in 2008. It has also cut the domestic excise tax on bioethanol to 0.1 Kazakh tenge per litre from 400 Kazakh tenge ($3.30) and the export tariff to 0.1 tenge per litre from 3 euros ($4.24). Yet Kazakhstan has built only two bioethanol plants. Traders said one was yet to sell a single litre as it could not sort out a tax problem with neighbouring Russia. Musina said the other did not disclose its sales volumes. UKRAINIAN LAW Feofilov told the conference about 40 small Ukrainian firms had started production of biodiesel. He estimated output at just 28,000-32,000 tonnes in 2006/07 due to high production costs. «This year, we believe that biodiesel output will be even lower,» he said. Ukraine's parliament has approved a law on biofuels, giving tax breaks to biofuel producers and allowing private firms to produce bioethanol. But President Viktor Yushchenko has yet to sign this law, which also orders the use of biofuels in big cities and helps imports of production technology. «We expect the new parliament to pass the law without changes,» Feofilov said. Ukraine holds parliamentary elections on Sept. 30. In Russia, high taxes and bureaucracy are obstructing plans by companies to launch production of bioethanol, while biodiesel costs remain too high to compete with traditional diesel, producers told the conference. A dozen Russian companies have announced plans to produce bioethanol from grains, but none of the potential producers are willing to proceed until laws are eased. «We had a plan to build a bioethanol plant, but we have shelved it and are now sitting and waiting for developments,» said Nikolai Bobin, general director of Zeros, a firm based in central Russia. «There is no use in producing diesel from rapeseed when you can still find traditional fuel on the market cheaper,» the director of another agribusiness firm told Reuters.
Date: 26.09.2007 Leave your comment
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