UK firm’s failed biofuel dream wrecks lives of Tanzania villagers

The collapse of Sun Biofuels has left hundreds of Tanzanians landless,
jobless, and in despair for the future

Damian Carrington in Tanzania
The Observer,    Sunday 30 October 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

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

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

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.

Damian Carrington

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