• Cabinet has approved a plan to expand national ethanol production from 155 million to 600 million litres annually by 2035, a 287% increase
• Current domestic ethanol pricing from Green Fuel stands at approximately USD 1.10 per litre, which is higher than the FOB price of imported petrol at Beira
• For the 600 million litre target to be commercially viable, ethanol production costs must fall significantly through scale efficiencies, higher sugarcane yields, and new market entrants

Harare- Cabinet has approved a plan to expand national ethanol production from 155 million litres to 600 million litres annually by 2035, a 287% increase that the government has framed as a transformative intervention in the country's fuel supply architecture and a mechanism for reducing petroleum import expenditure.

The plan's commercial credibility rests almost entirely on one variable, the price at which Zimbabwe's ethanol reaches the blending depot, and whether that price, at current and projected levels, is low enough to make blending a genuine saving relative to imported petroleum rather than an additional cost embedded in an already expensive fuel supply chain.

The Chisumbanje ethanol plant, operated under Green Fuel Zimbabwe Private Limited,  is one of the largest biofuel facilities in Southern Africa, with an installed capacity estimated at over 150 million litres per year, forming the backbone of Zimbabwe's blending programme.

Green Fuel is led by General Manager Conrad Rautenbach, whose family controls the broader operation. Green Fuel's 2026 production target is 120 million litres of ethanol, backed by an upgraded 40-million-litre storage facility that the company says can sustain E20 throughout the year instead of cycling back to E5 during off-season crushing periods.

The Chisumbanje plant converts sugarcane molasses and juice into fuel-grade ethanol supplied to national blending depots operated under the National Oil Infrastructure Company of Zimbabwe.

Triangle Sugar, whose Lowveld operations in Triangle town produce ethanol as a byproduct of sugarcane processing through molasses fermentation, is the secondary producer in the national supply chain. Triangle's production is structurally different from Green Fuel's in one commercially important respect, because Triangle's sugarcane cost is already absorbed in sugar production, the molasses feedstock for its distillery carries a lower effective input cost than Green Fuel's dedicated sugarcane-to-ethanol model.

Triangle's ethanol is, in principle, cheaper to produce per litre than Green Fuel's, but its capacity is smaller and its distillery infrastructure less prioritised for expansion relative to Green Fuel's deliberate scale-up strategy.

The domestic price of ethanol from Green Fuel has consistently tracked and often exceeded the landed cost of imported petrol. The FOB price of petrol at the port of Beira sits at approximately USD 1.09 per litre, and the unit price of ethanol supplied by Green Fuel is approximately USD 1.10 per litre. Global fuel ethanol prices generally range between USD 0.50 and USD 0.70 per litre as of late 2025 and early 2026. Key benchmarks include FOB Gulf prices around USD 0.50 per litre and Brazilian FOB Santos prices at roughly USD 0.56 to USD 0.60 per litre.

The implication of those numbers is that Zimbabwe is paying approximately USD 1.10 per litre for domestically produced ethanol at a time when the same product is available on the global market for between USD 0.50 and USD 0.70 per litre. The premium that Zimbabwe's blending programme pays above the global market benchmark is between 57% and 120%, depending on the reference price used.

Brazil, the world's most efficient sugarcane ethanol producer, delivers ethanol to its own fuel blending infrastructure at prices that reflect the productivity gains from decades of varietal improvement, mechanised harvesting, and vertically integrated mill-to-distillery operations across a sector that produces approximately 30 billion litres annually. Zimbabwe's Chisumbanje operation, at 150 million litres of installed capacity, operates at one five-thousandth of Brazil's national scale and without the historical efficiency investment that makes Brazilian FOB prices commercially competitive at USD 0.56 per litre.

The most significant criticism of the E20 mandate is its failure to lower the cost of fuel for the consumer. Zimbabwe consistently records some of the highest fuel prices in the SADC region, reaching USD 2.17 per litre in March 2026. Because ethanol production is managed by a near-monopoly, there is little competitive pressure to pass savings to the motorist. The ZERA reduction on 19 June 2026 brought E20 fuel to USD 1.98 per litre, but this remains among the highest fuel prices in the region for a blended product whose domestic content is supposedly providing a cost advantage over imported pure petrol.

Green Fuel has confirmed that at a blending ratio of E20, approximately 380,000 litres of ethanol are produced per day, equating to foreign currency savings of over USD 10 million per month. When blending at E10, forex savings amount to around USD 5 million per month. The Reserve Bank of Zimbabwe estimates E20 could save USD 100 million annually in petroleum imports. Green Fuel highlighted that motorists would save roughly USD 0.18 per litre at the pump if the market used E20 instead of E5.

The foreign currency saving calculation is arithmetically valid under specific assumptions. If Green Fuel's ethanol displaces imported petroleum at USD 1.09 per litre FOB Beira, and the ethanol costs USD 1.10 per litre, the saving per litre displaced is essentially zero, and the USD 10 million per month figure describes the gross import substitution rather than a net saving. The net saving is the difference between what Zimbabwe pays Green Fuel per litre and what it would otherwise pay for an imported litre of petroleum, and at current pricing that difference is negative: Zimbabwe's domestic ethanol costs more than the petroleum it displaces.

The USD 0.18 per litre saving cited by Green Fuel and the VP's tour represents the comparison between E20 and E5, not the comparison between E20 and unblended imported petroleum. It is a staggering economic irony that it would actually be cheaper to import pure unblended petrol and sell it to motorists than it is to mix it with locally produced ethanol, given that petrol FOB Beira is approximately USD 1.09 per litre while Green Fuel charges approximately USD 1.10 per litre.

The price differential is the commercial expression of a single-supplier arrangement in a market where the buyer, the national blending infrastructure through NOIC has no alternative source and the seller has no competitive pressure to reduce its pricing below the implicit petroleum price ceiling.

What the 600 Million Litre Target Requires to Be Commercially Rational

The plan's target of 600 million litres annually by 2035 is achievable in engineering terms and commercially rational only under one of two conditions.

The first is that Green Fuel's per-litre production cost declines materially as capacity scales from 150 million to 600 million litres, allowing the company to price below USD 0.80 per litre and closer to USD 0.60 to USD 0.70, at which point domestic ethanol is genuinely cheaper than imported petroleum and the foreign currency saving per litre becomes real rather than theoretical.

Scale economies in fermentation and distillation infrastructure are genuine, and a fourfold expansion of capacity would reduce fixed cost per litre significantly if variable cost per litre of sugarcane feedstock is managed through irrigated productivity improvements rather than simply more land at the same yield.

The second condition is new producer entry. The 600 million litre target cannot be met by Green Fuel alone from its Chisumbanje base without an investment programme of such scale that the capital cost recovery would likely maintain or increase per-litre pricing rather than reduce it. Triangle Sugar's expansion of its molasses-based distillery, whose feedstock cost is already absorbed in sugar production, could produce ethanol at structurally lower cost per litre than Green Fuel's dedicated sugarcane model.

New entrants in the Hippo Valley corridor, utilising molasses from expanded sugarcane hectarage under the 2026 to 2035 plan's own productivity pillar, would create the competitive dynamic that Green Fuel's current monopoly position prevents from developing. The government's framing of the 600 million litre target as a national policy objective rather than a single-company expansion creates the implicit invitation for new producer entry whose regulatory enablement the plan's policy pillar must explicitly address.

The South Africa Export Opportunity and the Price Problem

South Africa's 2% mandatory biofuel blending target creates a demand for approximately 400 million litres of biofuel-compatible ethanol annually when enforced, a volume that Zimbabwe's expanded capacity could partially supply. But the export opportunity is price-dependent in a way that the domestic supply arrangement is not. South African fuel blenders purchasing imported ethanol compete against South African domestic sorghum ethanol producers whose cost structures, in a mature domestic market, reflect genuine competitive pricing rather than administered monopoly pricing.

Brazilian FOB Santos prices of USD 0.56 to USD 0.60 per litre are the global competitive reference point against which any Zimbabwean ethanol export offer must be measured. Zimbabwe's ethanol at USD 1.10 per litre plus inland freight from Chisumbanje to a South African blending depot is not competitive in any regional export market. It is only commercially viable in the domestic market because the government has made it the mandatory fuel component and set the purchase arrangement accordingly.

For the export opportunity to become real, Zimbabwe's ethanol production cost must converge toward global benchmarks. A pathway exists through the productivity improvements the plan's yield target describes: increasing sugarcane yield from 81 to 110 metric tonnes per hectare reduces the feedstock cost per litre of ethanol produced by approximately 26%, which on current cost structures would bring the effective production cost from approximately USD 1.10 toward USD 0.80 to USD 0.85 per litre. Still above global benchmarks, but materially closer.

The additional efficiency gains from larger-scale distillery operations, mechanised harvesting, and lower energy cost from the plan's cogeneration expansion push the trajectory further in the right direction. Whether that convergence reaches USD 0.60 to USD 0.70 per litre by the mid-2030s is an engineering and investment question whose answer determines whether Zimbabwe's 600 million litre target generates an exportable surplus that earns hard currency or simply expands a domestic captive market at above-global-market pricing.

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