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South Africa, Sugar Body in Talks to Use Bagasse for Electricity

South Africa’s Sugar Association is in talks with the nation’s government about using bagasse, a byproduct from cane, to generate power and help stem a shortage of electricity in the country.

“It is being worked on with government and hopefully, in the next couple of months, something will come up,” Trix Trikam, the association’s executive director, said in a March 5 interview. “We are at a crucial stage of discussions now.”

South Africa, where chronic electricity shortages led to the suspension of mines and factories in 2008, has embarked on a program to boost generation by awarding contracts to build wind, solar and biomass plants. Bagasse, the part of sugar cane that remains once the juice has been extracted, isn’t regarded by the government as a renewable source of electricity, according to Remgro Ltd. (REM)’s TSB Sugar Holdings unit, which supplies 2 megawatts to 7 megawatts to the country’s grid.

“We could make about 1,000 megawatts, but a lot of capital investment will be needed,” Trikam said. “So we’ll have a lot more electricity that we can put on the grid to be used by South Africans.”

One megawatt is enough electricity to power about 1,000 U.S. homes.

South Africa, which has the continent’s biggest economy, is seeking 3,725 megawatts of power from renewable sources. The deadline for companies to submit bids in the third of five bidding rounds has been postponed to Aug. 19 from May, according to the Department of Energy’s website on the program.

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Sugar millers, which already generate power to run their operations, are willing to invest to produce more energy, Trikam said.

“We can make those boilers much more efficient and we can invest money in bigger boilers,” Trikam said. “You’ll get much more electricity, which we can put on the grid to be used by South Africans.”

The country is Africa’s biggest producer of the sweetener. Output of saleable sugar fell to 1.82 million tons, the lowest in 17 years, in the 2011-12 season after a two-year drought in the KwaZulu-Natal province cut yields, Trikam said.

Sugar output by the industry, which directly employs 79,000 people, has climbed to 1.96 million tons in the 2013 season, Trikam said.

Tongaat Hulett Ltd. (TON) is South Africa’s largest sugar producer by market value. Illovo Sugar, another producer in the country, also has operations in Malawi, Zambia, Tanzania, Swaziland and Mozambique.

Raw sugar for May delivery gained for a fourth day, adding 0.1 percent to 18.78 cents a pound on ICE Futures U.S. in New York yesterday.

To contact the reporter on this story: Tshepiso Mokhema in Johannesburg at tmokhema@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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