In Ghana's first industrial-scale biofuels project, Northern Sugar Resources Ltd will grow sugar cane on 30,000 hectares of currently unused land in the centre of the country and turn it into ethanol in a plant that will be built by Constran S/A of Brazil, executives of the two companies said.

"Subject to the financial agreements being signed in June, the initial plan is for us to be exporting at half capacity -- that is 75,000 cubic metres -- in the second half of 2010," Roger G. Walters, technical director of Northern Sugar's parent Regency Resources told AFP.

"It's good news for Ghana. Even though the fuel ... is not going to used in Ghana, it very good news because this plant will provide jobs," Deputy Information Minister Frank Agyekum told AFP.

At full capacity the plant will produce 150,000 cubic metres of ethanol per year.

Svensk Etanolkemi AB (Sekab), a Swedish green fuels company, has committed to buying the first 10 years of the plant's production, Managing Director Anders Fredriksson told AFP in a telephone interview from Sekab's headquarters in Ornskoldsvik.

"One of our big missions is to bring Africa into the global biofuels market. Africa has a huge potential for economic growth with the forthcoming biofuels explosion," Fredriksson said, adding: "It's also a great opportunity for Africa to produce alternative fuels."

The project requires a total investment of 306 million dollars (197 million euros), according to Fabio Pavan, business development director of Constran S/A, who was in Accra for meetings with Northern Sugar.

Of that total 260 million dollars will come from a loan granted to Northern Sugar by the Brazilian government development bank BNDES, Pavan said.

"This is a win-win project," he said, noting that this is the first loan by the Brazilian government to Ghana in the history of bilateral relations.

One year of production from Ghana, once the plant is running at full capacity, will cut Sweden's ethanol deficit by almost one third, Pavan said.

And after one year of production, ethanol should rank fourth amongst Ghana's exports, behind coffee, gold and timber, he added.

The first year of the project will just be the cultivation of sugar cane. The second year will see a start to production and the third year production at full capacity.

The project has preliminary approval from the BNDES and a final agreement should be signed in June.

The site where the sugar cane is to be cultivated and the plant built lies at the northern tip of Volta Lake, about 100 kilometers (63 miles) south of Tamale.

"It's a savanah-type grass area, very flat, with a lot of old river beds and no cultivation," Walters said

Ironically, according to Sekab's Fredriksson, the land to be used by Northern Sugar was developped two years ago to grow sugar. The European Union then changed its tariffs to protect its own sugar and the project never got off the ground.

Asked about the ethics of using land for biofuels production, Fredriksson argued that huge swathes of land are lying unused in Africa.

"It's more of a structural problem -- there are huge amounts of land not used."

Producing ethanol is going to bring in money that can be used to develop agriculture, he said, adding that while Sekab is just involved in the Ghana project as a buyer, in Tanzania the company is active in ethanol production.

"Another issue is that there's going to be between 1,000 and 2,000 people employed during the project and afterwards, so it is going to support some 8,000 people, it's going to raise the economy, give them money to buy food, school their kids etc.," he continued.

The surplus electricity generated during the processing will be sold to the Ghanaian government, which lacks sufficient electricity for the country's requirements, Regency Resources CEO Kojo Fosu said.

Biofuels were developed as part of plans to limit and reduce greenhouse gas emissions, held responsible for global warming, but since in some cases they take up land that would otherwise be used for food production, they have been increasingly blamed for soaring food prices.

The leaders of some poor nations have accused developped countries of caring more about having fuel in their cars than about ensuring the poor have access to staple foods.

Brazilians President Luiz Ignacio Lula da Silva argues that the sugar cane cultivated in Brazil for ethanol is not a food crop and it not grown on land that would otherwise be used for food crops.

"The most important thing is not the acreage you farm on but how efficiently you use what little land you have," Agyekum said.

He said he hoped the plant would eventually equip Ghana with the technology it needs to produce biofuel for domestic use.

"We also know that fossil fuels will not be with us for ever, so even though we have recently discovered oil, we need the technology to produce biofuel," he said.

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