Ethiopian Airlines Signs MoU With Satarem America to Produce Sustainable Aviation Fuel Locally

Satarem America has entered an agreement to begin producing Sustainable Aviation Fuel (SAF) in Ethiopia, and Ethiopian Airlines has committed to purchasing its product. The memorandum of understanding with Satarem America, a leader in sustainable energy solutions, will allow Ethiopian Airlines Group to integrate SAF into its operations using locally sourced jet fuel from sugar cane ethanol. This shift is expected to cut carbon emissions and contribute to global climate change mitigation efforts. SAF is a more environmentally friendly alternative to conventional jet fuel, made from sustainable feedstocks that help reduce greenhouse gas emissions.

Ethiopia has tremendous capacity in SAF production from Ethanol due to its large-scale sugar cane plantations, with over 4 million hectors of land under cultivation. In addition, the recently reorganized state-owned Ethiopian Sugar Industry Group(ESIG) owns a total of eight sugar mills that ran into financial problems from 2013 to 2018. ESIG was one of the most leveraged state-owned enterprises (SoE) in the country. The state has since restructured a large chunk of this debt overhang and is now soliciting bids for private investors. 

Ethiopian Investment Holdings, an entity that manages the country’s sovereign assets, has sought to invite foreign direct investment that fosters value addition in the country’s sugar sector. Satarem America seeks to leverage Ethiopia’s latent capacity in ethanol production and conversion to jet fuel. Crucially, the company will gain a guaranteed large customer in Ethiopian Airlines, which is eager to convert a portion of its fuel to the more sustainable SAF. Authorities in Ethiopia view this as a win-win market approach, one that also helps to reduce imported Jet fuel. 

Despite the promising MoU however, the Satarem’s capacity and strength are not easily discernible from public resources. Satarem lacks broad public coverage and detailed business information. As a niche market player, it may have limited visibility and confidentiality around its operations, financial health, and strategic plans. For a more accurate assessment of Satarem America’s capabilities, proper due diligence and direct engagement with the company or insights from industry experts would be necessary.

Mesfin Tasew, CEO of Ethiopian Airlines Group, expressed enthusiasm about the partnership with Satarem America Inc. He stated, “We are thrilled to collaborate with Satarem America Inc as we advance towards a greener and more sustainable future. Adopting Sustainable Aviation Fuel is more than just a business choice; it demonstrates our dedication to fighting climate change and investing in innovative solutions that foster a more sustainable aviation industry.”

This MoU comes on the heels of Ethiopia’s recently announced macroeconomic reforms, which promises to ease foreign exchange, rid long established economic distortions, and attract quality investment into the country.