Commodities
IFC invests Sh32 billion in Kenya’s biofuel project
Friday November 17 2023
Phyllis Nduva, a castor seeds farmer at her farm in Makueni on February 10, 2023. Eni Kenya has contracted aggregators to supply it. PHOTO | PIUS MAUNDU | NMG
The International Finance Corporation(IFC) is set to invest Sh31.96 billion ($210 million) in an agribusiness project by Italian firm, Eni Kenya.
The IFC said the investment in the form of a senior loan will support capital requirements by Eni Kenya towards the construction and operation of agri-processing plants in the country.
The project is projected to cost Sh32.41 billion ($213 million) with the World Bank’s private sector lending arm promising to help mobilise an additional Sh11.41 billion ($75 million) from other lenders.
Read: IFC invests Sh7bn in fund for Africa, Asia projects
Eni has initiated a biofuel project in Kenya that involves the contractual engagement of third-party farmers and aggregators to supply oil seeds (feedstock) to Eni-owned agri-processing plants in Makueni and Kwale counties. Eni Kenya’s third agri-processing plant is planned for construction in Nakuru county and a fourth at a location yet to be determined.
In the strategy by Eni Kenya, the seeds will be processed to produce vegetable oils for export to Eni bio-refineries in Italy and further refined into different bio-energy products (biofuels).
The firm will develop and oversee supply chains for the agri-hubs, including 200,000 hectares of oilseeds production, and reaching over 200,000 smallholder farmers through contracted aggregators.
“The biofuels will be International Sustainability and Carbon Certification certified as advanced biofuels, being produced from “low indirect land-use change” feedstocks that do not compete with food production because these non-edible oilseeds, like castor and croton, are grown on degraded lands not suitable for food production and/or are grown in rotation/intercropping with food crops,” the IFC said.
Testing the market
Eni Kenya in October 2022 announced that it had shipped out its first batch of vegetable oil for biorefining, raising the prospects of its production hub in Makueni.
The firm exported the cargo to its Gela bio-refinery in Sicily as it targets to produce 2,500 tonnes of bio-fuel by the end of 2022 and 20,000 tonnes by the end of this year.
The shipment marked the pilot phase of Kenya’s bid to produce aviation fuel and hydrogenated vegetable oil diesel and cut reliance on pure fossil fuels.
Production of biofuel is part of the global shift to clean fuels and reduce carbon emissions that have significantly polluted the environment.
Biofuels are composed of biodegradable materials such as vegetable oils and are mixed with fuels such as diesel to cut pollution levels.
Eni Kenya is producing the oil in its Makueni pressing plant that was opened in July to process castor, croton, and cotton seeds.
Read: IFC to guide Kenya’s bank loan pricing reforms
The company also plans to export used cooking oil from hotel chains, restaurants, and bars in Nairobi as part of environmental conservation through recycling.
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