Global Policy Forum

UK Firm’s Failed Biofuel Dream Wrecks Lives of Tanzania Villagers

Sun Biofuels came to the Kisaware district of Tanzania with the promise of 700 jobs and financial compensation, but left villagers jobless, landless and without compensation when the company folded. To meet the EU and the UK’s rising biofuel targets, companies from the global North are buying substantial amounts of African land to grow plants that can be processed into biodiesel. According to The Observer, at least 30 biofuels projects—like Sun Biofuels—have been abandoned in 15 African countries in recent years.

By Damian Carrington

The Observer

October 29, 2011

"People feel this is like the return of colonialism," says Athumani Mkambala, chairman of Mhaga village in rural Tanzania. "Colonialism in the form of investment."

A quarter of the village's land in Kisarawe district was acquired by a British biofuels company in 2008, with the promise of financial compensation, 700 jobs, water wells, improved schools, health clinics and roads. But the company has gone bust, leaving villagers not just jobless but landless as well. The same story is playing out across Africa, as foreign investors buy up land but leave some of the poorest people on Earth worse off when their plans fail.

The tale of London-based Sun Biofuels's misadventure in Kisarawe links the broken hopes of the villagers to offshore tax havens and mysterious new owners, tracked down by the Observer, and ultimately to petrol pumps in the UK and across Europe. The final link results from the mandatory blending of biofuels into European petrol and diesel. The aim is to reduce carbon emissions, but many say biofuels actually increase pollution. The G20 meeting next week will discuss the issue, following a stark report it received in June from the World Bank, World Trade Organisation, UN and others calling for biofuels subsidies to be abandoned.

"The situation in Kisarawe is heartbreaking, but the real tragedy is that it is far from unique. Communities across Africa and beyond are losing their land as a result of the massive biofuel targets set by our government," said Josie Cohen at development group ActionAid, which works in Kisarawe. "Like it or not, everyone who drives a car or catches a bus is involved in this problem, as all UK petrol and diesel is mixed with biofuels."

It was the promise of this lucrative export market that led Sun Biofuels to Africa to plant jatropha, the seeds of which can be processed into biodiesel. Mkambala's first contact with the company was in 2006 through the former Kisarawe MP, Athumani Janguo. "People trusted him. We thought all our problems would be solved," Mkambala told the Observer. He says no compensation has been paid for the land, on which villagers used to hunt animals, gather firewood, wild mushrooms and honey.

Mhaga has no electricity, and water has to be carried each day from a well several kilometres away, back to the small mud or concrete-block houses in which 1,000 people live. "Water is everything," says local activist Halima Ali, sitting with three of her children on the earth floor of their home. "Because they promised there would be water available, everyone was happy." There would be more time for farming and more time for her children to go to school, she says. But the company drilled only a 6in-wide hole in the village, despite having sunk a 100m well on the plantation. "We thought something very good had come to the village, to lift our standard of life, but now we are only crying," she says.

Sun Biofuels was the first company to come to the area and about 50 people in Mhaga rushed to take jobs at its plantation, some queueing for days for the £42-a-month salary. Saidi Abasi was one, but he was soon unhappy. He asked his employer why a promised pay rise failed to materialise. "The reply was 'if you want to work, work. If you don't, get out'," he says.

Abasi's job was spraying pesticides, but he claims he was initially given no protective equipment. "During spraying, we became like drunk people," he says. When his contract was terminated after Sun Biofuels went into administration, he says he was not paid the full severance pay due for his 18 months of service.

Mhaga's crowded school teaches 257 children and was promised new classrooms, books and materials, says teacher Rhamadani Lwinde, but all that appeared were a few portable blackboards. In addition to the village land, the company also took 670 hectares of Lwinde's family land, he says. He was offered 13m Tanzanian shillings (£4,835), which he says was not a good price, "but we were advised to accept it by the district authorities. If we had problems we would sort it out later, they said." In the end he says he was paid for just 85 hectares.

In the nearby village of Mtamba, villagers tell the same stories of broken promises and unpaid compensation. Tabu Koba says he was one of 11 people to lose land and one of nine who received no money at all. "We are very angry," he says. "My children have now left school but have nowhere to farm."

Sun Biofuels and two related companies went into administration in August, but their shares in a Tanzanian subsidiary – Sun Biofuels Tanzania, which did not go bust – were sold. The insolvency company directed the Observer to Christopher Egerton-Warburton and a company called Thirty Degrees East, based in the tax haven of Mauritius. Egerton-Warburton is a former Goldman Sachs banker and now a partner at the London-based merchant bank Lion's Head Global Partners. "We are part of a consortium that purchased the shares of Sun Biofuels Tanzania," he said. "Given that we are currently in the process of raising additional funds, I am not at liberty to discuss publicly or off the record about our long-term plans."

Egerton-Warburton said a site visit was not possible, but when the Observer went to the plantation it was able to interview farm manager Ambilikile Mwenisongole, who has worked there for four years and lives on site. He confirmed that fewer than 50 of the 700 workers remained and that the plantation was not operating due to the change of ownership. Mwenisongole said the progress on the water wells and other social services were "not on target because of the transition", but he denied that workers lacked tools or protective equipment and rejected claims that access to an ancestral graveyard had been blocked. He blamed the complaints on rumours spread by "lazy" villagers.

It was not possible for the villagers to get their land back, Mwenisongole said. "It is now owned by the government. The government was meant to compensate the land owners." In Tanzania, large land deals are done through the district government, which acquires the land and then leases it to companies. District officials have told villagers that Sun Biofuels did not pay all the money due, but refused to see the Observer.

Mwenisongole named Kenyan Alan Mayers as the new chief executive of Sun Biofuels Tanzania. Mayers said he could not comment on the previous owners' failure to provide wells and classrooms, but added: "We are looking into the matter and our community relations officer is in constant contact with the villages." Villagers say that there has been just one recent meeting.

Mayers said all compensation for land and all due severance pay had been paid, and that he was unaware of claims by ex-workers that national insurance payments were missing. He added: "We are focused on a positive, collaborative relationship with local people."

Yet Kisarawe MP Selemani Saidi Jafo said: "I am the MP and I am not yet informed there is a new owner. What is the secret behind it? I need investors to come to my district, especially to help bring employment for many people. I prefer a win-win project, but this is not a win-win." Why Sun Biofuels went bust is unknown, as attempts to contact the previous owners were unsuccessful. Whatever the reason, the company is far from alone. A large jatropha plantation created by a Dutch firm called Bioshape in the southern Tanzanian district of Kilwa has also gone bankrupt, leaving locals complaining of missing land payments. Also in Tanzania, a large ethanol biofuel project set up by Swedish company Sekab went bust. In both cases, the land has not been returned to its owners.

Further afield, in Ghana, a Norwegian-backed jatropha project has collapsed, while in Mozambique a UK-linked company called Procana, behind a huge ethanol project, has folded in acrimony. The Observer's investigations and those of journalist Stefano Valentino have identified at least 30 abandoned biofuels projects in 15 African countries.

The thirst for biofuels to meet the UK and EU's rising targets has led British companies to lead the charge into Africa. Half the 3.2m hectares of biofuel land identified is linked to 11 British companies, the biggest proportion of any country. ActionAid's estimate suggests that up to 6m hectares has been acquired. But with landowners frequently illiterate and unaware of their rights, the potential for exploitation is high.

In Kisarawe, the villagers do not know if the promises will ever be kept. They feel deeply betrayed and are increasingly angry as time passes without answers. "If we have not got our rights by December, we will slash the jatropha plants," says Mkambala. "That will be the clearest sign that we do not need this company here."


What are biofuels?

Biofuels are petrol and diesel substitutes produced from plants. Their great attraction is that they can be used by existing cars and lorries and, because the plants absorb carbon dioxide when they grow, burning them does not fuel global warming - in theory.

What's the problem?

Many studies have now shown that existing biofuels, such as petrol substitutes produced from corn or diesel replacements from soya or palm oil, are actually worse for the environment than petrol, once you have factored in all the fertilisers, processing and transport. Furthermore, converting food into fuels has been widely linked to the rising food prices which have driven millions around the world into hunger.

Is the UK involved?

Yes. British fuel suppliers are already required to blend a few per cent of biofuel into all petrol and diesel, rising to 5% by 2013-14. This is despite 70% of these biofuels failing to meet the government's own green standards. The EU also has a target of 10% of all fuel being derived from plants by 2020. This is driving the demand for biofuels, with UK companies ahead in acquiring millions of hectares of land in Africa.

Is there any hope for biofuels?

So-called second-generation biofuels, which produce fuels from plant waste such as stalks or wood chips, would avoid the competition with food but are only at the research stage. Even further away, and perhaps even more promising, is producing fuels from algae grown in ponds or tubes. But the volumes of fuel currently used are so vast that, even with some environmentally friendly biofuels, we will need more efficient and more electric vehicles as well as better public transport if we are to tackle climate change.


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