The economic significance of using bagasse as a source of raw material for pulp manufacturing: a case of Ethiopia

MBL 3 Research ReportBagasse which is the fibrous residue that remains after sugar is extracted from sugar cane is used as an alternative source of raw material for pulp and paper manufacturing across many parts of the world. But here in Ethiopia, the ever growing demand of paper and paper products seems to be in quite contrast to the presence of no one pulp mill in the country. It is believed that the scarce availability of pulp raw materials and the requirement of huge capital for investment are the two main reasons why there is no one pulp mill in the country. On the other hand, the massive new capital investment for new sugar factories and the vigorous expansion of the existing once seems to have a promising and potential source of pulp raw material as this leaves quite huge amount of bagasse that can be used for pulp and paper manufacturing. In countries like Ethiopia where alternative energy sources such as the hydro- electric power (HEP), wind, and geothermal are relatively cheaper, using bagasse for electric generation is considered low value use for a higher value resource and this was the most important issue that this particular study has tried to address. This study investigated the economic significance of using bagasse as a source of raw material for pulp and paper manufacturing. The study also compared this issue with the currently undergoing practices of cogeneration, where bagasse is burnt in the sugar mill boilers to produce steam and generate electricity. Operating mills and sugar mill projects that are expected to be realized in the near future were analysed to determine the bagasse pulping potential of the country. Stakeholders and company executives were interviewed to complement the result obtained from mills‟ operation performances. The result revealed that using bagasse for pulp and paper manufacturing is economically feasible and more significant than using it for cogeneration. And also, the stakeholders‟ and executives‟ opinion survey suggested that using bagasse for pulp and paper manufacturing is economically advantageous and strategic issue for the overall economic growth of the country. This is because bagasse pulping enhances the economic utilization of available resources, and enables the local production of pulp and paper which further facilitates the development of other strategic sectors such as the education, agriculture and chemical. As part of its investigation, this study not only investigated the economic significance of producing pulp and paper from the substance bagasse, and that the printing and packaging industry be enhanced and developed to the desired level, but also it promoted the sugar mills so that they can save and sale their bagasse with a price that is better than the price for the equivalent electrical energy which ultimately helps them to remain competitive in the prevailing international sugar market. Therefore, as the per capita consumption of paper and paper products specifically and the chemical sector development in general directly measures the economic development of a given country, government should promote the sector and show its strategic commitment in creating a conducive working environment for both local and foreign private investors. This in turn helps local and foreign private investors to inject capital investment and transfer technology and management knowhow to the country. Finally, an integrated effort among all the stakeholders including the government, company executives, the owners of capital, and the community in general is required in order for the country to achieve its Millennium Development Goals where the vision is to build poverty free and medium income earning EthiopiaGraduate School of Business LeadershipM. B. L