Kazakhstan to adopt biofuel law

By Robin Paxton

ASTANA (Reuters) - Kazakhstan will next year adopt laws to regulate its fledgling biofuel industry and plans to construct at least two more plants in the next 18 months to produce environmentally friendly fuel from crops, industry officials said.

The Central Asian country has the potential to produce 300,000 tons a year of biodiesel and export half, vice-minister for agriculture, Akylbek Kurishbayev, told Reuters.

Kazakhstan could also produce up to 1 billion liters of bioethanol, he said.

"The potential is huge. If we use this potential wisely, we can become one of the world's top five producers of biofuels," Beisen Donenov, executive director of the Kazakhstan Biofuels Association, said on the sidelines of a grains forum.

Kazakhstan harvested a post-Soviet record of 20.1 million metric tons of wheat this year, giving it ample stocks to use in production of bioethanol. The country has recently started to grow rapeseed in its northern provinces, from which biodiesel can be produced.

Finding markets, however, will be crucial. The country's first and only biofuel producer, privately owned Biohim Co, has been unable to sell most of its production due partly to import restrictions in target markets. The $100 million plant, opened last year, is not currently operating.

"We are making upgrades, improving the technology," Biohim General Director Yevgeny Sutyaginsky said. "In mid-December, we'll start the plant again."

Biohim can produce 57,000 tons a year of bioethanol at its plant in the town of Taiynsha, 400 km north of the Kazakh capital Astana. Sutyaginsky said it had sold 4,000 tons to trading company Vitol this year, but had been unable to sell much more to date.