SOUTH Africans will take a step closer to driving on blended fossil fuel and biofuel when the Department of Energy publishes its final regulations on what will become mandatory blending of fuels by the end of next month.

The regulations, which have been slow in coming, will herald a new energy future for SA, which is often criticised for lagging behind the world, and much of the rest of Africa, in the development of ethanol from sugar cane.

While the government will set the initial ratios of the blend to be used in SA, it will also define the financial aspects of biofuels products - who gets paid what, from cane farmer to dispenser.

SA was lagging behind other African countries, particularly in the development of ethanol from sugar cane, a situation expected to change once government policy was defined, said Richard Orendo Smith, chemicals, materials and food research analyst at Frost & Sullivan.

The proposed new regulations are expected to set out the requirements and conditions for the blending of bioethanol and biodiesel with petrol and diesel.

The development and use of biofuels will give SA an alternative to fossil fuel sources such as coal, in line with the government's aim to diversify energy sources. Large-scale use of biofuels could reduce the country's greenhouse gas emissions.

Tongaat Hulett CEO Peter Staude said earlier this year the slow pace of consolidating the policy framework for electricity co-generation and biofuels was frustrating potential energy contributors.

The Department of Energy issued draft regulations for the mandatory blending of biofuels last year and invited comments.

"The department has considered the comments from the office of the chief state law adviser and is now in the process of finalising these regulations to obtain the minister of energy's approval to publish final mandatory blending regulations. It is anticipated that the final regulations will be published before the end of July," the department said this week.

It was also finalising a financial support mechanism that would become part of the regulatory system, as biofuels manufacturers would require financial support "for some time".

The scarcity of large-scale production of biofuel from sugar cane was mainly due to a lack of a clear policy and regulatory framework, Mr Smith said.

SA had enormous potential for biofuel "when one takes into account the country's current production of sugar cane, compared to other countries in Africa in which such projects are under way", he said.

Sugar production in SA was estimated at 2,4-million tons, translating to about 20-million tons of sugar cane and potentially, 1,6-billion litres of ethanol, he said.

"However, from SA's total production of sugar, roughly 55% of it is consumed locally and in neighbouring countries ."

If SA used its surplus of 9-million tons of sugar cane for ethanol production, the market size for bioethanol would be about 720-million litres, he said.

At 21,1-billion litres, Brazil is the second-biggest ethanol producer after the US.