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Investing in ethanol production for exports

By Godwin Uba
01 February 2022   |   4:04 am
Ethanol production for local consumption and export is one of the lucrative businesses to invest in. With cassava as major raw material, investors are sure to make good profit from the project.....

Ethanol production for local consumption and export is one of the lucrative businesses to invest in. With cassava as major raw material, investors are sure to make good profit from the project, especially as the technology and manpower are available in the country.

Ethanol (industrial alcohol) is used in the pharmaceutical companies, distilleries, laboratories, hospitals, soap and detergents, cosmetics, beverage, among others. It is also used in the production of sanitizers.

As the demand of these items increases, the demand for ethanol will also be on the increase, and for the dearth of local producers, companies that depend on ethanol as raw material, depend on foreign countries for supply.

Raw materials requirement
Apart from cassava, other raw materials for ethanol include palm-wine, maize, potato, molasses, sawdust, and yam. All these are abundant in the country.

Required machinery and equipment
The equipment required are: filtration unit (distillation columns), hammer mill, mixer, fermentation tanks, stirrers, plastic pumps, laboratory quality control units, pasteurizer, filling and corking machines. These equipment can be produced locally.

Production processes
One tone of cassava tubers can yield between 400-600 litres of alcohol, while palm-wine yields between 128-140 litres of ethanol. Details are available in the feasibility studies for prospective investors.

Market potentials
Despite the huge consumption, there are only four production plants in the whole of West African including Nigeria. These companies are not producing enough to meet demand. It will be surprising to note that about 90 per cent of the local consumption depends on imports at exorbitant price. So, investment in ethanol production is certainly a good business. Some of these industries are:

• Alcoholic/Beverages industries: These companies need large quantity of ethanol for their products, which include, gin, brandy, whisky, wine.
• Surface coating industries: paint, thinners and adhesives producers use ethanol as a major solvent.
• Cosmetics firms: cosmetics industries need ethanol for the production of perfumes, dyes, aftershave lotions, among others.
• Drugs making: ethanol is used to produce over the counter (OTC) drugs such as body creams, methylated spirit, some syrups and mixtures.
• As preservatives: biological specimens are preserved in laboratories with ethanol.
• Fuel: ethanol is used to ignite lamps, stoves and for flaming in hotels and foundry works, where soot is not needed. It has been used and is still in use as substitute to petrol in Brazil and some Latin American countries.
• Other uses: ethanol is used in laundry and dry cleaning business too. It is good as antifreeze for automatic radiations and raw material for making resins, acetic acid, chloroform and others. Ethanol is in high demand in the USA, Germany, South Korea, Poland, among others.
• Suitable location for siting the project

This project can be located in any part of the country, but better nearer the location of raw material, area with good electric supply and good roads. It can conveniently be set up on one to two plots of land.

Investment analysis
With about N50.5m, any investor can kick-start the project. According to analysis carried out by the writer, profit after tax could rise from N203.9m in the first two years to about N711.6m in the fifth year. It is also important to note that the payback period is less than one year with 94 per cent return on investment. This project is foreign exchange free as no importation is required and all the raw materials and human resource requirement are locally available.
• For details contact: Uba of Global Trust Consulting. Tel:08034494437, (WhatsApp), 08023664368. Email: ubagodwin@yahoo.com

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