Dubai Group, a financial services company of Dubai Holding, has invested $49.5 million (€31.2 million) for approximately 30% of Malaysia’s GBD Investment (GBDI), the largest biodiesel plant in southeast Asia.

The investment was made by Dubai Ventures, the equity investment company of Dubai Investment Group, a subsidiary of Dubai Group.

GBDI has completed construction and begun production of its 200,000 tonne biodiesel facility at Lahad Datu in the state of Sabah, Malaysia. The company is preparing to begin construction on its phase II facility, which will increase GBDI’s biodiesel production capacity to 500,000 tonnes a year. GBD’s plant has the ability to use both palm oil and jatropha as feedstock.

GBDI’s facility will produce biodiesel and pharma-grade glycerine under the European (EN) and US (ASTM) standards for the Korean as well as global markets. GBD has already signed off-take agreements for all of its production.

‘Biofuels and renewable energy are the preferred industry focus for Dubai Investment Group, and we intend to bring this technology to the geographic regions, especially the Middle East, where we currently have a presence,’ Abdulhakeem Kamkar, CEO of Dubai Investment Group, says.

GBDI intends to use the proceeds from the recent placement for working capital in the Lahad Datu biodiesel plant and its investment into jatropha plantations in the Philippines. The plantation, which will cover up to 200,000 hectares, will have a potential annual production of 750,000 tonnes of crude jatropha oil.

The Pakistan Ethanol Manufacturers Association (PEMA) and Pakistan Sugar Mills Association (PSMA) have called on the central government to impose an E5 ethanol mandate and to amend excise rules to waive permit fees and excise duties on ethanol.The association believes the imposition of excise fees is outdated in light of the country’s focus on diversifying its energy source model.

Pakistani oil marketing companies have called on Pakistan to explore alternatives to ethanol. The companies say that there is no shortage of petroleum in the country with shortages being most acute in the diesel market.

Pakistan, which spends $11 billion (€7.4 billion) on oil imports, had formed the biofuels task force to investigate the production of 65,000 tonnes of biofuels required to fulfill a 5% ethanol mandate.

Oil marketing companies have also been critical of the slow conversion to biofuels in neighbouring India. A report in the Economic Times states that Indian oil marketing companies are unable to switch to E5 blends that would save them $1.52 for every gallon of petrol replaced with ethanol.

Earlier, the Indian central government revealed a plan to cut taxes on ethanol as an incentive to stimulate demand. Excise duty stands at 15%, plus state taxes of 4-20%, plus import fee, permit fee, license fee, administration fee and state excise taxes.

Malaysia-based IJM Plantations, part of construction and investment company IJM Corporation, will invest $185 million (€127 million) to develop land in East Kalimantan, Malaysia, for palm oil production.

The company has increased its plantations to 60,000 hectares in the past two years, and will add another 30,000 hectares with this development.The company is constructing a biodiesel plant in Sabah and is proceeding with building and installation of a first processing module with 9 million gallons a year capacity.

Apart from palm oil, the Sabah Land Development Board (SLDB) has proposed to expand jatropha capacity in Malaysia, as a poverty-reduction programme, claiming farmers could earn RM 1500 (€317) a month from farming 6-acre plots of jatropha seedlings.

The SLDB says that said that Nihon Biotech, Kelana Stabil and TKM Resources have indicated that they would invest up to RM 300 million in jatropha cultivation and would purchase the fuel for export to the US, Japan and South Korea. Sabah also announced this month that it would seek $304 million over 18 years from the Federal Government to assist in the development of its Palm Oil Industrial Cluster (POIC) in Lahad Datu.

Nigeria’s first ethanol refinery will be constructed by Global Biofuels. At full capacity the refinery will produce 1.5 million litres of ethanol a day using sorghum as feedstock. Plantations feeding the refinery will span seven Nigerian states, with further expansions being discussed. The refinery has been endorsed by The Nigerian National Petroleum Company (NNPC).

Global Biofuels CEO Felix Babatunde Obada disclosed that 30,000 hectares of land have been acquired to actualise the present phase of the project in Ondo State. Work will commence with initial cultivation of 50 hectares of land, to be upscaled to 300 hectares.

In June 2007 the government approved a national biofuels policy and incentives. A national workshop involving a wider range of stakeholders is being planned, and feasibility studies have been completed for five bioethanol projects at specific locations in three states. Feasibility studies on biodiesel are on-going and discussions are being held with potential investors to implement the project.

‘The biofuels industry is becoming a reality in Nigeria,’ MD of NNPC, Abubakar Yar’Adua, says. ‘Developed economies such as the US and Europe are stepping up their target usage of biofuel and Nigeria must not be left out.’

Biofuels is becoming one of the main topic mostly discussed by D-8. The organization is to have a 4th meeting the D-8 Energy Work Group meeting in Cairo in the period from 29 to 30th of April, 2008. The meeting is to be held and hosted by the Ministry of Petroleum of Egypt.

Prior to that, D-8 Secretary General, Dipo Alam, has appealed to all D-8 memberstates as developing countries to study and scrutinize this theme, while at the the same time keep on examining methods to overcome the challenge of sky-rocketing fuel and petroleoum prices.  D-8 organisation urges the cooperation of all related parties to formulate solution to the current high fuel price problem.

Biofuels will likely be part of a portfolio of solutions to high energy prices, including conservation, more efficient energy use, and use of other alternative fuels. William Coyle writes for Amber Waves Publication about this issue.

With near record oil prices, the future of biofuel-made from plant material-is of keen interest worldwide. Global biofuel production has tripled from 4.8 billion gallons in 2000 to about 16.0 billion in 2007, but still accounts for less than 3 percent of the global transportation fuel supply. About 90 percent of production is concentrated in the United States, Brazil, and the European Union (EU). Production could become more dispersed if development programs in other countries, such as Malaysia and China, are successful. The leading raw materials, or feedstocks, for producing biofuels are corn, sugar, and vegetable oils.

While rapid expansion in biofuel production has raised expectations about potential substitutes for oil-based fuels, there have been growing concerns about the impact of rising commodity prices on the global food system. According to the International Monetary Fund, world food prices rose 10 percent in 2006 because of increases in corn, wheat, and soybean prices, primarily from demand-side factors, including rising biofuel demand. The Chinese Government put a moratorium on expanded use of corn for ethanol because of rising feed prices and is promoting other feedstocks that do not compete directly with food crops, such as cassava, sweet sorghum, and jatropha (an oil-bearing plant originally from South America).

Mexico capped tortilla prices in early 2007 to contain food price inflation from higher priced corn imports. Real sugar prices hit a 10-year high in 2006, stressing budgets of low-income people in Brazil and elsewhere. Prices have since declined. The Indonesian Government increased the export duty on crude palm oil, also used in biodiesel production, in mid-2007 to slow the rising cost of domestic cooking oil.

U.S. livestock producers are facing increased costs for corn and other feed, which may translate into higher retail meat prices. And in Japan, historical concerns have been revived about the country's almost complete dependence on imports of feed grain and oilseeds to support its large livestock sector.

The outlook for global biofuels will depend on a number of interrelated factors, including the future price of oil, availability of low-cost feedstocks, sustained commitment to supportive policies by governments, technological breakthroughs that could reduce the cost of second-generation biofuels, and competition from unconventional fossil fuel alternatives.

A New Era of High Oil Prices Attracts Investment in Biofuels

The rise in oil prices is the most important factor boosting the competitiveness of alternative fuels, including biofuels. The unprecedented 6-year rise in oil prices has prolonged opportunities for efficiency gains, stimulated energy conservation, and generated increased supply from traditional and alternative energy sources. While these adjustments may eventually lower oil prices, most forecasts do not show real prices falling below $50 per barrel.

Previous periods of high oil prices were short. Prices tended to rise very sharply, usually induced by military conflict, peaked in a matter of weeks or months, and then declined sharply. Following these price spikes, the rapid decline in petroleum prices made it difficult to sustain alternative fuel programs and reduced incentives for consumers to curb their use of petroleum products.

Unlike previous high-price periods, the current oil market is driven by strong demand-side factors. These factors include robust economic growth and rising oil demand from rapidly growing middle-income economies, where consumers are demanding a higher standard of living and exhibiting big appetites for energy. Almost two-thirds of recent global growth in oil demand has come from China and other middle-income economies.

Profitability of Biofuels Depends on the Availability of Low-Cost Feedstocks

Feedstock costs are the most significant cost of biofuel production, ranging from 37 percent for sugarcane-based ethanol in Brazil in 2003-04 to 40-50 percent for corn-based ethanol in the United States. Sugar beets represented 34 percent of the cost of sugar-based ethanol production in the EU. With rising commodity prices, these cost shares are even higher now. Another major cost component is energy, which may account for as much as 20 percent of biofuel operating costs in some countries.

The ratio of crude oil prices to feedstock prices offers a simple indicator of the competitiveness of biofuel made from various feedstocks. The ratio of crude oil to corn prices, for example, rose sharply after 2004 as oil and ethanol prices increased and corn prices were stable. But the ratio dropped sharply after September 2006, making biofuels less cost competitive. Biodiesel producers in Europe and Southeast Asia also faced declining competitiveness as soy and palm oil prices rose in 2006-07. World sugar prices, on the other hand, declined by 50 percent from 10-year highs in 2006, boosting relative prospects in Brazil's ethanol sector.

The sale or productive use of byproducts also contributes to a biofuel plant's profitability. Dried distillers' grain (DDG), a byproduct of corn ethanol production, can be used as a protein-rich livestock feed additive. Sales of DDG can add as much as 10-15 percent to ethanol producers' incomes. Carbon dioxide, usually released into the atmosphere, is captured by some ethanol plants and sold for use in the food and beverage sector. Bagasse, the fibrous material left over from pressing sugarcane, can be burned to provide heat for distillation and electricity to power machinery or sold to local utilities. Glycerin, a byproduct of biodiesel production, has a wide number of pharmaceutical, food-processing, and feed applications.

Government Support Is Used To Reduce Volatility

Strong long-term government intervention is a feature in the two top biofuel-producing countries-the United States and Brazil (See Box Below "LESSON FROM BRAZIL")-as well as the EU, China, and other countries. Governments justify support in the name of achieving broad societal goals: to diversify energy sources, to enhance energy security, and to meet environmental and rural development objectives. Governments tend to introduce support to help fledgling biofuel ventures overcome cost and scale disadvantages and weather the inherent volatility in profits.

Governments have introduced a variety of policy tools that reduce risk and uncertainty in response to investor and producer concerns about the double-edged uncertainty of volatile feedstock and energy input prices and biofuel output prices. The most common tool is a requirement to blend biofuel with its fossil fuel counterpart to provide a guaranteed market for biofuels. The nature of this requirement varies around the world in the extent to which it is mandatory, the phase-in period, the volume or blend percentage mandated, and whether a nationwide or regional strategy is used.

Countries also rely on subsidies, tax credits, and preferential taxes to overcome the higher cost of biofuel production relative to gasoline and diesel and to encourage consumers to buy biofuel-containing gasoline or diesel. Europe offers an 18.7-euro per acre energy premium for production of biofuel feedstocks. India's Government offers sugar mills interested in setting up ethanol production facilities subsidized loans for 40 percent of project costs. Brazil encourages consumption by imposing a lower sales tax for hydrous ethanol (containing water) and E25 (25 percent ethanol) than for gasoline.

The United States provides a $.51 per gallon tax refund for blenders of ethanol and $1.00 per gallon for biodiesel from vegetable oils and animal fat ($.50 for recycled cooking oil or animal fat). Some States also provide support, and other Federal incentives are provided for smaller biofuel plants.

Import restrictions are also used to promote the emerging biofuel industry. Effective tariffs range from 9 percent in Canada (for ethanol imports from Brazil, 0 tariff for renewable fuels from the U.S.) to about 45 percent for undenatured and 24 percent for denatured ethanol in the EU. Import duties and tariffs are waived by the EU for many developing countries (not including Brazil). The U.S. tariff on ethanol is currently about 25 percent when the 2.5-percent tariff is combined with the $.54 per gallon duty.

Brazil is the only country promoting biofuel use beyond minimal blending levels by allowing consumers to choose it as a fuel substitute. The Brazilian Government has promoted the availability of ethanol at almost every gasoline station and the manufacture of flexible fuel cars (capable of using pure gasoline, E25, or pure hydrous alcohol). Proposed U.S. legislation would also provide incentives for expanding E85 distribution and the manufacture of more E85-capable vehicles.

While biofuels share similar attributes with oil-based fuel, they are not perfect substitutes. Biofuels can be used in existing gasoline and diesel engines in blends of up to 10 percent in the case of ethanol and 20 percent for biodiesel with little or no engine modification. This compatibility contrasts with hydrogen fuel cell technology, which would require a radically different distribution system.

However, ethanol has only two-thirds the energy content of gasoline, and biodiesel has 90 percent that of diesel. Thus, a car will get fewer miles per gallon the greater the biofuel blend. Shipping ethanol is more expensive; it cannot be transported by low-cost pipelines because of potential contamination from ethanol's tendency to absorb water and to dissolve impurities on the inside surfaces of multiproduct pipelines. Dedicated pipelines for ethanol are being considered in Brazil and the United States and may become economical with expanded production.

Looking to the Future: The Potential of Second-Generation Biofuels

Many uncertainties remain for the future of biofuels, including competition from unconventional fossil fuel alternatives and concerns about environmental tradeoffs. Perhaps the biggest uncertainty is the extent to which the land intensity of current biofuel production can be reduced. The amount of biofuel that can be produced from an acre of land varies from 100 gallons per acre for EU rapeseed to 400 gallons per acre for U.S. corn and 660 gallons per acre for Brazilian sugarcane.

Cellulosic ethanol could raise per acre ethanol yields to more than 1,000 gallons, significantly reducing land requirements. Cellulosic ethanol is made by breaking down the tough cellular material that gives plants rigidity and structure and converting the resulting sugar into ethanol. Cellulose is the world's most widely available biological material, present in such low-value materials as wood chips and wood waste, fast-growing grasses, crop residues like corn stover, and municipal waste.

U.S. cellulosic fuel production costs are now estimated at more than $2.50 per gallon, compared with $1.65 per gallon for corn ethanol. Venture capital and government subsidies are supporting companies interested in making cellulosic ethanol commercially viable, primarily in the United States, but also in several other countries, including Canada, Brazil, China, Japan, and Spain.

In the meantime, other costs of cellulosic ethanol production need to be fully assessed, such as the impacts of harvesting grasses, trees, and crop residues on the erodibility and fertility of land resources. There are also questions regarding the upstream logistical and environmental costs of harvesting, transporting, and storing large volumes of bulky feedstock used in processing.

Competitive Fossil Fuel Alternatives

High oil prices have drawn attention not only to biofuels, but to a range of other liquid fuel alternatives. Large investments are being made in developing more difficult-to-access conventional oil resources located in remote areas or deeper waters, unconventional sources, such as oil sands and heavy crude oil, and the conversion of coal to oil. While world oil production is expected to increase 30 percent by 2030, production from unconventional fossil fuels will increase even faster, according to the U.S. Department of Energy. Global biofuel production is projected to more than double. Many of the fossil fuel alternatives have lower costs of production than biofuels. Canada's oil sands, for example, can produce oil for $30 per barrel. Current production is more than 1 million barrels per day, with some forecasting production rising to more than 3.5 million barrels per day by 2030.

Another alternative is converting coal to oil, which is of particular interest to economies with abundant coal resources, such as China and the United States. Oil prices of $40 per barrel may be sufficient to make this process profitable despite high investment costs.

What Are the Environmental Tradeoffs?

A key interest in developing or expanding biofuel production and use is the environmental benefits, including the potential to reduce emissions, such as greenhouse gases (GHG). An estimated 25 percent of manmade global carbon dioxide (CO2) emissions, a leading GHG, comes from road transport. Global road transport has grown rapidly over the past 40 years and is projected to continue to increase, especially in middle-income countries experiencing rapid economic growth, middle-class expansion, and urbanization.

Both biofuels and gasoline give off CO2 when burned. Biofuels are theoretically carbon neutral, releasing CO2 recently absorbed from the atmosphere by the crops used to produce them. Gasoline and other fossil fuels add to the CO2 supply in the atmosphere by giving off CO2 absorbed and trapped in plant material millions of years ago.

The advantage of biofuels is less clear in a "life-cycle" analysis that examines not just combustion, but the production and processing of the feedstock into fuel. Most studies indicate that the net energy balance of biofuels is positive (energy output is greater than energy input), but estimates vary widely. Net balances are small for corn ethanol and more significant for biodiesel from soybeans and ethanol from sugarcane and from cellulose. The biofuel with the highest net energy balance reduces GHG the most when compared with that for gasoline.

Another important environmental consideration is the potential land requirements if biofuels become a more mainstream fuel. According to the University of Minnesota, devoting all U.S. corn and soybean acreage to ethanol and biodiesel production would offset only 12 percent and 6 percent of gasoline and diesel consumption for transportation fuel, respectively, and even less if adjustments were made for the fossil fuel requirements for producing the biofuel.

Use of so much land to meet a relatively small share of transportation fuel demand is improbable. The resource commitment to meet domestic fuel demand would be less in a lower income economy. Expanding feedstock production, however, that encroaches on fragile rainforest areas and wildlife habitats is still a concern in countries like Indonesia, Malaysia, and Brazil.

Future Role of Biofuels Depends on Profitability and New Technologies

Technological advances and efficiency gains-higher biomass yields per acre and more gallons of biofuel per ton of biomass-could steadily reduce the economic cost and environmental impacts of biofuel production. Biofuel production will likely be most profitable and environmentally benign in tropical areas where growing seasons are longer, per acre biofuel yields are higher, and fuel and other input costs are lower. For example, Brazil uses bagasse, which is a byproduct from sugar production, to power ethanol distilleries, whereas the United States uses natural gas or coal.

The future of global biofuels will depend on their profitability, which depends on a number of interrelated factors. Key to this will be high oil prices: 6 years of steadily rising oil prices have provided economic support for alternative fuels, unlike previous periods when oil prices spiked and then fell rapidly, undercutting the profitability of nascent alternative fuel programs. On the other hand, the sector's profitability has been negatively affected by rising feedstock prices (corn and vegetable oil, not sugar), which account for a very large share of biofuel cost of production. For this commodity-dependent industry, government support to reduce profit uncertainty has been a common theme in the U.S., Brazil, and the EU, where biofuel production has been most significant.

Biofuels will most likely be part of a portfolio of solutions to high oil prices, including conservation and the use of other alternative fuels. The role of biofuels in global fuel supplies is likely to remain modest because of its land intensity. In the U.S., replacing all current gasoline consumption with ethanol would require more land in corn production than is presently in all agricultural production. Technology will be central to boosting the role of biofuels. If the energy of widely available, cellulose materials could be economically harnessed around the world, biofuel yields per acre could more than double, reducing land requirements significantly.

Source: Amber Waves Publication, 2007.

Babajide Daniel Esq, Chief Executive Officer, Daniel Galileo Inc., a brand management consultancy outfit, is a man with tremendous faith in the Nigerian economy. With over 14 years cognate experience as a senior marketing and sales management resource person at PZ Industries Plc., where he contributed immensely to the development of marketing communications and brand strategy, Daniel, a 1982 graduate of economics from the University of Sunderland, England, and holder of a Masters Degree in marketing from the University of Strathclyde.

He has a vision to create the best one stop marketing communications solution outfit with premium quality and optimal delivery standards. He notes in this interview that with the Nigerian economy on the upward trend, it is a golden opportunity for entrepreneurs to consolidate the dividends of the new business climat

AS an entrepreneur, what’s your assessment of the Nigerian economy?

The Nigerian economy is on the upward trend. There are specific indicators which can be classified into primary and secondary categories. If you look at the level of construction that is going on in the country today, it would be clear that the economy is dictating a trend. It is taking place at two levels, the private sector and the public sector. In the private sector, there is a glaring increase in the construction industry. How do we know this? Just look at the price of cement. Even though the cement factories are not operating optimally, there is no doubting the fact that there is an upward trend in the industry. Take a look at the quarries, they are more functional and many more quarries are being opened up along the Lagos-Ibadan expressway.

Buildings are being put up everywhere. Right from Oshodi in Lagos to Abeokuta, Ogun State that used to be undeveloped, the area is now being developed. the entire national landscape is rapidly being developed. So you may ask where are people getting the money if the economy is not improving? People are earning incomes and they are building houses. It’s all thanks to the improved economy.

How can this be rationalised considering the high cost of cement?

That is a function of demand. If the economy is down, people would not have money for capital projects if they have not fed. So it is because people have money that they are putting up buildings. Go to Victoria Island and Ikorodu town in Lagos, you would discover people are not building houses for the fun of it. Most are putting up buildings to let out for rent.

Look at all the estate agents, they are building house after house to the extent that within one year of starting a project, it has taken off. This means there are so many people moving up from the lower class to the middle class and are aspiring to move to places like Ikoyi and Surulere, Lekki and Ajah in Lagos. All these point out that the economy is on the increase. They are the primary indicators.

What are the main challenges?

Of course, we’ll want to look at the challenges. We know the level of power generation is low and there are many issues about power, but even if we look at the naira itself, vis-a-vis other currencies, it is getting stronger by the day and that is the determinant that people are demanding more for naira than dollar. It is another indication that the naira is appreciating against other currencies. We are in March and I believe the British pound exchanges for about N245 or N246 now.

It used to be as high as N256. This is an upward trend from what it was in December last year. My point is that a function of the currency is a function of the growth of the economy. In America for instance, the currency is going down, therefore the economy is also going down.

There has been talk about emergence of the middle class…?

Yes. The middle class is gradually emerging. It’s part of the effects of the economic management policy streaming down into the economy. It’ll take time, but eventually it’ll stream down into every facet of the economy, whether it’s finance, insurance, banking or whatever area of the economy. People are earning better incomes, sectors that were not engaged before are now engaged and even for those that were previously engaged, their performance level has gone up appreciably. For instance, the banks are no longer talking of raising N25 million, but N100 million.

These banks employ staff and pay them well. There are communications companies coming into the country to empower our people and also pay them well. people are moving from one job to the other because of better remuneration. So the middle class is coming back, that is why we are having formal development in the exchange sector.

Is this reflecting in better standard of living?.

When we are talking about an economy moving up, we want to ask, who are the people getting the money? There are different classes of workers. the people that can be employed, those that do not want to work and those that are working. Now, are they getting the right wages? Those who are worried about what the money they have in their pocket can get them are the low-income people. These are the ones you can buy their skills anywhere.

These are people whose values have not gone up, so their remuneration has not gone up. But those who are in short supply, that is, the educated people, or the while-collar set of people that are moving from job to job, are in demand. These people are not complaining and if at all they have complaints, it is about not being able to do all they wanted to. More people are moving into jobs and they are socially mobile.

Why do you think there is so much traffic jam on Lagos roads. The roads are not being expanded fast enough, because there are too many cars. More people are buying cars, Those who have bought cars already are buying more. The trend of upward social mobility is tremendous. This is the computer age. Anyone who is not computer literate will not get a job. There is what is called identified qualified workers. Are you qualified is the question.

Yes you went to school, but if you are not computer literate, no one will employ you. I tell you there are jobs. Look at the newspapers and you’ll see vacancies everyday. this is because people are moving in and out of jobs. People are moving up now more than ever before. Look at the social marketing industry, it is not proliferated, but actually an indication of the state of the economy. There was a time when about two or three agencies would share a single marketing budget, and they’d be glad because they knew they’d be making their money inside that budget.

What can you say about the real value of the naira?

The naira is stabilising but it would take a number of years to return to the 1:1 parity between the naira and dollar like it used to be several years ago. For any economy to grow, the first sector that must grow is the banking sector. Now there are foreign multinational banks in Nigeria. May of them are really keen on investing because they have seen the indication of the potential of the economy and the more the banking sector grows, the stronger is the environment for business. If things continue the way they are today, in the next few years, the stability and security of the business scenario would be further ensured and the naira would keep appreciating. Are you saying we shouldn’t worry about parity now?

What is your view of Prof. Chukwuma Soludo’s attempt at redenominating the naira?

I think government was right when it stopped Soludo’s attempt to re-denominate the naira because it would only be applicable on paper and it could have destabilised the whole system if care was not taken.

It is not really re-denomination that matters but the amount of money that you have and its value against other currencies. Ghana did something like that and the Cedi came down. If the Cedi could have come down, and it is steady and improving, it is because the investors have had confidence in the improvement of the economy.

Today, Nigerian investors are going to Ghana. Nigerians are living in Ghana because of the enabling environment which I believe is what is in the offing for Nigeria. If there is a way of reducing the investment risk, things will get better. The way I see it, if you cannot make money in this country, it is unlikely you’ll make money anywhere else. The opportunities are there, it is just that things have to be done professionally and at the right time. There certainly is hope for the future.

When you look at the market, you see so many new products owned by foreigners who come in to do business. Before these people come in with their money, they know they are going to succeed and that means they have seen an opportunity.

As the economy improves, there’ll be different options for people to take. Look at the soft drink industry. It is growing in leaps and bounds. Another industry is the noodle. There was a time it was only one brand of noodles in the entire country, but that has changed. Today, there are at least five and business is going on fine. Everyone is creating a niche for himself and the economy is moving on.

What’s your advice on retail auditing?

Every company requires a comprehensive retail audit and this is best done by reputable firms. There are some companies who do it themselves in-house, but it is certain that such companies would not be optimising their potentials, because it is the same person who is involved with their sales that is sent into the field. So on what aspect would that person be expected to concentrate? Is it in sales or in collating the retail data? This invariably affects the effectiveness.

What are the common obstacles to retail auditing in Nigeria?

There is general lack of information about what a retail audit entails and what benefits can accrue from it But the most important aspect is cost. many companies do not want to spend money because they think it is expensive and believe so much in the traditional media method. But what I wish to point out is that the volume method and the traditional media approach are quite different. Fine, they are good at raising consumer consciousness, but after the initial hue and cry, people go back to what they used to buy. The reason for this may be as a result of loyalty.

The companies utilising the volume approach, however, may have realised that the only way to capture the entire market is to cover every nook and cranny. Every market has its own style and value. The only way to get your own share is to know the value and the retailers. It pays off in the end.

Source: Allafrica.com

Bangladesh has sought a $100 million loan from the Asian Development Bank (ADB) to develop its largest gas-producing Titas field. “The ADB has agreed to provide the loan as we had asked for,” said M. Tamim, a special aide to the head of Bangladesh’s army-backed interim government, responsible for the ministry of power, energy and mineral resources.

Titas, located in Brahmanbaria, 100 kilometres (62 miles) east of the capital Dhaka, produces around 450 million cubic feet (mcf) of gas per day and is operated by state oil and gas agency Petrobangla. A well of the field has been closed for several months since a blowout in December 2006, officials said.

The energy division of the ministry has asked state-run Bangladesh Gas Fields Company Limited (BGFCL) to examine all the wells at Titas field. “Gas has been leaking through that well for years and it may take up to a year to have an overall check-up and remedy it,” Tamim said. He said the fund would be required for the maintenance of all 10 wells of the field.

An ADB official said the bank had agreed in principle to approve the fund for the overall development work of the field. “We will place the proposal to the board of directors for final approval,” the official said.

The Titas field has 5.13 trillion cubic feet (tcf) of gas in reserve, of which 2.46 tcf has been used since production started at the site in 1968. Bangladesh produces up to 1,738 mcf of gas a day against daily demand of 1,833 mcf, officials said.

Bangladesh’s proven and recoverable gas reserves of 13.54 tcf and the gap between demand and supply will widen further over the next five years if no new gas is found, officials said.

D-8 Organisation is scheduled to hold the 4th D-8 Work Group meeting on Energy, in Cairo in the period from 29 to 30th of April, 2008. D-8 Secretary General, Dipo Alam, said that the objective of this meeting is to engage the energy experts in the D8 member countries into a thought provoking discussions on the current Energy challenges facing these countries, and to exchange experience on the energy policies adopted in the member countries.

The only way to tap the multi-billion food market in Islamic countries is to establish a halal standard and the Turkish agriculture minister asks why Turkey shouldn’t do so when New Zealand has.

At a time when McDonalds produces halal chicken nuggets and New Zealand is the predominant supplier of red meat to Muslim countries, Turkey cannot afford to be left out of the multi-billion dollar industry, the agriculture minister said in an interview with Turkish business daily Referans. As part of the ongoing debate in Turkey about the introduction of Halal food, food permissible according to Islamic law, and its possible implications in society as a whole Mehdi Eker said the Agriculture Ministry intended to take the necessary measures once the decision to establish a Halal standard is reached.

“Halal food contains no substance banned by Islamic rules. Halal food needs to be prepared, processed and stored in areas that have none of these banned substances,” he said, noting that all meat in New Zealand, one of the largest meat exporters, is produced according to Halal regulations. Substances banned in Islam include pork and pork products and alcohol.

Eker said a minister in New Zealand told him that the reason why they abided by Islamic rules was because they exported to Islamic countries. He said the halal food issue, which has become very divisive in Turkey, is a commercial decision.

“New Zealand is a Christian country. It applies these rules and exports to all the Islamic countries. The same is done by Israel. If Turkey is to sell its foodstuff to Islamic countries and if the customers want it, why shouldn’t it introduce a standard,” he said.

Added burden on producers:

Food producers in Turkey voice political and financial concerns against implementing a halal standard. Turkish Food and Beverages Associations Federation President Şemdi Kopuz said firms may use the halal standard for products destined for export and could also use it in the local market. “Then we will see halal food as opposed to haram [forbidden by Islam] food. One needs to assess the dangers carefully,” he said.

Milk and Meat Producers Union (SETBİR) President Erdal Bahçıvan supported Kopuz, claiming the headscarf issue has been broadened to include food. “Halal certificate is not an urgent need. Those who need it get it from overseas anyway.”

A major meat producer Banvit’s General Manager Ömer Görener said he was not against halal certificate but saw it as an added burden on producers. “Those firms that want it can get something very similar from the Religious Affairs Directorate that states that no pork or pork derivative is used in the products. These products are marketed overseas, including to Arab countries. A new certificate system will mean added costs.”

Open to abuse:

While the Turkish Standards Institute (TSE) is preparing its own halal standard, there are others that want to enter the halal certificate market left empty in Turkey.

The TSE has been working on the standard for the last two years and is expected to introduce it next year. Meanwhile, Etika Consulting has become the Turkey representative of Australia-based Halal Certification Authority and wants to start issuing certificates in the first half of 2008.

The TSE’s President Kenan Malatyalı said the certificate issued by the Religious Affairs Directorate was not as authoritative as a halal certificate. He said they wanted to start issuing certificates early next year. “Turkey is late in this matter. One reason is the unpreparedness of all sides,” said Malatyalı.

Etika Consulting General Manager Orhan Erdemir said the halal certificate was very important for firms trying to enter Muslim markets. “We will issue such certificates only for foodstuff at first. Annual inspections will be conducted by experts coming from Halal Certification Authority Europe.”

Halal Standard

This standard is used mainly for food, but also for cosmetic and cleaning products. It is in place in most countries with an Islamic majority but also in China, Thailand, India, Europe, the United States and South Korea. Experts believe the Halal product market is worth $150 billion and will grow to $500 billion by 2010. There are more than 50 halal standards in around 20 countries. The market for Halal certificates alone is said to be worth $240 billion.

D-8 Organisation urges the memberstates to underline the importance of halal food market, at least initially within D-8 itself. The halal food sector is indeed a promising sector not only for moslem majority countries, but also non-moslem majority ones such as New Zealand, USA, and Canada. Along similar lines, D-8 Secretary General Dipo Alam reminded the wish of Malaysian Prime Minister Abdullah Badawi during the D-8 Summit in Bali, May 2006, who encourage memberstates to seek further opportunities in this bright sector.

The policy debate on biofuels is at a crossroads. Public sentiment in the United States and Europe has swung from enthusiasm to alarm, following a string of reports on the high costs of biofuel subsidies, adverse impacts on land and water use, and the “food vs. fuel” trade-off. Many environmental and agroindustry groups are now openly opposed to expanded biofuel production. A U.N. official recently went so far as to call for a worldwide moratorium on biofuel projects, reported by Inter-American Development Bank publication.

According to the publication, for industrialized countries with temperate climates and limited quantities of available farmland, these positions are understandable. Biofuels in the North are generally derived from feedstocks such as corn and rapeseed that have low energy efficiency and require expensive inputs. And since most arable land in the North is already under cultivation, biofuels are likely to compete with food crops if expansion continues.

But these constraints simply do not apply to many developing countries with tropical climates and underutilized agricultural resources. In the South, most biofuels come from energy-efficient feedstocks such as sugar cane and palm oil (sugar cane yields up to 8 units of energy for every unit used in cultivation, compared to 1.3 units for corn). Land and water resources are abundant. Nearly 90 percent of Latin America’s territory, for example, is in humid or semi-humid climates, and by some estimates only 20 percent of that region’s arable land is under cultivation.

As a result, biofuel production in developing countries is far less likely to compete with food. In Brazil, the area currently dedicated to ethanol is 60 times smaller than the total stock of pastureland. Even if 100 percent of the country’s gasoline consumption were to be substituted with cane ethanol, the land required to grow it would still be around half of what Brazil currently devotes to corn.

Small developing countries that are heavily dependent on imported fossil fuels have especially compelling reasons to invest in biofuels. Guyana, for example, relies on imported oil to generate all of its electricity. Yet sugar producers, who account for around 9 percent of the country’s GDP, are able to meet their power needs using generators that burn bagasse (plant waste) left over during the production process.

These producers use old and comparatively inefficient equipment to co-generate electricity. The Inter-American Development Bank estimates if they were to switch to the latest techniques and upgrade to high-pressure boilers, Guyana’s sugar producers could supply up to half of the country’s total electricity needs-without planting any additional cane. Should Guyana use some of its abundant land to expand sugar cane production, it could produce enough ethanol to meet all its transportation needs, co-generate enough electricity to power its entire grid, and still export excess ethanol.

Clearly, the cost-benefit ratio of producing biofuels in the tropics is far more advantageous than in the industrialized North. Instead of issuing blanket condemnations of biofuels, the international community should find complimentary and productive ways to exploit these differences.

D-8 Secretary General, Dipo Alam, appeal to all D-8 memberstates as developing countries to study and scrutinize this debate, while at the the same time keep on examining methods to overcome the challenge of sky-rocketing fuel and petroleoum prices.  D-8 organisation urges the cooperation of all related parties to formulate solution to the current high fuel price problem.

Southeast Asian nations are gearing up for a palm oil boom as interest in biofuels soars, but activists warn the crop may not satisfy a global thirst for energy that is both clean and green. They caution that oil palm plantations require massive swathes of land–either what’s left of the region’s disappearing forests, denuded plots that would be better off reforested, or land critical to supporting local people, AFP reported.

Governments and companies have been scrambling to cash in since palm oil prices jumped last year due to spiking demand from China, India and Europe, where biofuels should comprise 10 percent of motor fuels by 2020.

Indonesia has launched a particularly ambitious biofuels expansion program, which aims to see Southeast Asia’s largest economy source 17 percent of its energy needs from renewable sources by 2025.

Evita Herawati, an assistant to Indonesia’s minister of energy, said 5.5 million hectares (13.5 million acres) will be set aside for biofuel plantations by 2010, 1.5 million hectares of which are for oil palm.

“A lot of forest has been cut down but they didn’t use it at all. We would like to use it for this program,” she told AFP, adding that so far 58 deals worth a total of 12.4 billion dollars have been signed with companies.She estimated that just in Kalimantan, the Indonesian portion of Borneo island, about 5.5 million hectares are available for use–an area far larger than Denmark and a bit smaller than Sri Lanka. Nine million additional hectares are available elsewhere, Herawati said.

The issue of where the land will come from worries activists, who point out that much of Indonesia’s peatland forests have already been destroyed, releasing huge amounts of carbon dioxide.

Rully Syumanda, of Indonesia’s environmental watchdog Walhi, said proposing palm oil plantations has been used in recent years in Indonesia “as a pretext to clear land and take the more valuable logs”. He estimates that nearly 17 million hectares of Indonesia’s forests have been cleared ostensibly for oil palm plantations since the 1960s, but only six million hectares have been cultivated.

Rudi Lumuru, from Sawit Watch, an industry monitor, meanwhile said much of this “empty” land is actually used by local people. He reckons more than 500 communities have been embroiled in conflicts with more than 100 palm oil companies, typically from Malaysia.

“This land has been used since a long time ago by the people. They live on the land, they grow on the land,” he said. “The government says people can make money, but it’s about transition of culture. The culture of the farmers, it’s rice, coffee, cocoa–it’s not palm oil.”

The Indonesian industry says it is cleaning up its act.

“The industry now is trying to avoid destroying land,” said Derom Bangun, executive chairman of the Indonesian Palm Oil Association. “Companies no longer clear land by burning or in ways that harm the environment or wildlife.” Indonesian companies have joined the Roundtable on Sustainable Palm Oil (RSPO), a WWF-led initiative to engage palm oil companies, and is trying to abide by their principles, he said.

Companies in Malaysia, the world’s largest palm oil producer–expected to be eclipsed by Indonesia this year–are being lured here by the vast expanses of already-cleared land. Malaysian plantations minister Peter Chin insists palm oil production does not damage the environment and said Malaysian companies will boost productivity by replanting with higher yielding clones and adopting good agronomic practice.

According to the Malaysian Palm Oil Board, 65 percent of Malaysia’s total land area of almost 33 million hectares is comprised of forest. Palm oil plantations use 12 percent. Alvin Tai, plantation analyst at OSK Securities, said most of the companies listed on the Malaysian bourse are expanding in Indonesia as landbank in Malaysia is limited.

He said most major plantation firms were RSPO members and “they have the resources to maintain those standards. It’s the smaller plantation owners that are a concern”.

Malaysia’s northern neighbor Thailand is also getting in on the game.

High prices for palm oil, driven by Bangkok’s search for alternative fuels, have driven more and more farmers to convert rubber and fruit plantations to grow oil palm, an official from Thailand’s agriculture ministry said. Local prices of palm oil have almost doubled to more than four baht (seven cents) per kilogram (2.2 pounds) from two baht last year.

The Philippines meanwhile has about 25,000 hectares under cultivation, but some 454,000 hectares of “disposable land”–pasture or shrubbery–mostly in the south, has been earmarked as well, the agriculture department said.