Biofuels project exposes pitfalls
FARMING FUEL: The use of land to grow crops for fuel, rather than food, remains a contentious issue.
An ambitious project to produce clean energy for the Netherlands and Belgium has degenerated into a controversial abuse of natural resources in Tanzania.
Bioshape, a clean-energy company based in Neer, the Netherlands, is going through bankruptcy proceedings after spending $9.6-million on a failed biofuel project in that country.
In 2006, the company agreed to lease 80 000ha of coastal woodland in the southern district of Kilwa to grow Jatropha, a shrub whose seeds contain an oil that can be processed into green fuel.
Bioshape planned to employ thousands of local farmers and export seeds from Tanzania to the Netherlands, where they would be processed to produce electricity, heat and biodiesel. Jatropha is one of the preferred feedstocks for fuel produced from plant material. Commonly called biofuel - agrofuel to its critics - such fuel is supposed to be less-polluting than traditional fossil fuels.
BioShape invested 25 million euros in a facility intended to process 45 000 tonnes of vegetable oil a year and generate 25 megawatt hours, enough to power 50 000 households.
The project was backed by big investors such as the Dutch merchant bank Kempen and the utility Eneco.
THINGS GO WRONG
Explains Stanislaus Nyembea, expert at the organisation Lawyer Environmental Action Network: "Bioshape managed to acquire land through the complicity of local authorities which breached the rules on land lease."
Nyembea says villagers relied on their plots to grow food, mainly maize and fruit, as well as for firewood. They agreed to give their land away with the expectation of receiving fair financial compensation based on the value of the allocated land.
According to Tanzanian law, only the central government can lease a parcel of land larger than 200ha directly to foreign investors. So ownership of the land in Kilwa was first transferred to the central government, then the Tanzanian Investment Centre authorised the lease to Bioshape.
"We have found out that villages were not properly informed about the terms of the law," Nyembea explains. "They didn't know that they would definitively lose ownership of the land allocated to Bioshape. They naively thought that they would get it back at the end of the lease period that usually lasts 99 years."
Worse, only 40 percent of the compensation paid by Bioshape went to farmers, Nyembea continues.
"The rest went to the District Office which had persuaded local villages to sign up to the deal.”
Local farmers were not the only ones misled by Bioshape. The company had announced that the plantation would reach a size of 1000ha by the end of 2007 but high costs slowed progress and the trial plantation covers 285ha.
In February 2010, the company suspended its field operations and salaries to local employees. This followed the withdrawal of its major investor, Eneco, which had lost confidence in both the economics and the environmental sustainability of Bioshape's plans.
The 285ha trial plot cleared by Bioshape in Kilwa is still there. The jatropha shrubs have been left without water and are slowly drying out. But the trees cut down to make room for them have disappeared.
Wilfried Hermans, Bioshape CEO, said: "We needed to find a way to use the timber, so we made a deal with a company based in Arusha, called Artif, which bought part of it."
Artif does have a factory in Arusha, in northern Tanzania, which produces and exports furniture to the Netherlands; but its listed headquarters share the same Dutch address as Bioshape in Neer.
According to its confidential business plan, which IPS is in possession of, Bioshape expected to earn up to $6.7-million in profits from logging and to use this money to partly subsidise its biofuel project. Around 225 cubic metres of valuable miombo hardwood timber was harvested from just the first 70ha to be cleared.
DOUBTFUL ENVIRONMENTAL IMPACT ASSESSMENT
The Bioshape concession includes between 200 000 and 800 000 cubic metres of valuable hardwood, worth $50-150 million.
However, according to a WWF study published in 2009, the project's Environmental Impact Assessment failed to mention that the concession falls within the Namateule/Namatimbili Forest, an important reserve of biodiversity. The plantation thus poses a risk to seven threatened vertebrate species, according to the Tanzania Forest Conservation Group.
Five years after its ambitious launch, Bioshape's plantation has produced only a scar on the landscape. Jobs promised to villagers have not materialised, and they have seen only a fraction of the promised compensation for the land they were persuaded to give up.
For the moment, they are able to resume farming within the concession, but they have signed away their title to it and remain vulnerable to the project's resumption.
Despite the long list of doubtful practices in the Bioshape project, a number of new investors from the Netherlands, the UK, the U.S. and Italy have expressed interest in taking over its business, the legal firm in charge of the company’s bankruptcy have confirmed. - Sapa-IPS