Gel Fuel xChange - switching domestic paraffin use to a safe and healthy bio-ethanol gel fuel
Country: South Africa
Organisation: Clean Works
Technology: Ethanol Gel Fuel Stoves
Date submitted: 12 November 2007
Overview
We propose a business to introduce, exchange (from paraffin), market and distribute an alternative and safe fuel (ethanol gel fuel) in the low-income households in Imizamo Yethu, Hout Bay, Western Cape.
You can read more about the project and view the full business plan on my HEDON page - user:AttilaSzabo
The ethanol gel fuel is safe, environmentally friendly and also renewable as it is derived from bio-ethanol (sugarcane, maize). The gel fuel appliances (stoves and heaters) are also more stable, safe, simple to use and durable. Although the gel fuel and its appliances are slightly more expensive than paraffin and the paraffin appliances, the price gap significantly decreased in the last two years as international oil prices are continuously on the rise. Recent changes in government policies also point to the long term competitiveness of the ethanol gel fuel.
We forecast that we sell approximately 3000 gel fuel stoves and 1000 heaters by the end of year 1. The sales of appliances decrease after the market has saturated from year 2 and we forecast a yearly new sale of 500 stoves and 400 heaters from year 4 (replacing old / used equipment).On the other hand the sales volumes of the ethanol gel fuel increases as more and more of the new appliances used and we estimate that gel fuel sales will stabilize at a monthly volume of about 45.000 liters by the end of year 1 and about 80.000 liters monthly after year 2 (based on the current use volumes of paraffin monthly).
Duration
5 Years
Cost and financing
Our calculations are based on the assumption that the initial loan is paid back over a 5 year period.
R 320.000 capital investment is required for the setting up and initial stocking of the four township based container stores.
R 200.000 is allocated to create loan accounts to have bridging finance available for the stores and the warehouse. R100.000 of this loan facility covers the initial losses while the product sold at a subsidized price to make the business viable during year 1 & 2. (The gel fuel products are sold at an affordable subsidized price for an initial four months period - 30 – 30 - 20 - 10% subsidy - to make them comparable to the relatively cheap paraffin products. A liter of gel fuel costs R5.30 at this offer while the current paraffin price is R5.50 – 6.50 a liter.) These initial “incentive” is a key element for the successful introduction of the new products on this very price sensitive and conservative market.
Another R100.000 will cover the initial stocking and the daily running costs of the warehouse. This warehouse facility is necessary to ensure an uninterrupted supply of the goods as the demand increases.
(1 rand = USD 0.149 or Euro 0.103 or GBP 0.072)
Estimates of baseline and emissions displaced
Not yet known
Contact details
If you are interested in funding this project and require further information please contact me via my HEDON user page user:AttilaSzabo
