Last year the government spent 775 million dollars on oil imports, which was about 28 per cent of export earnings, he said. He was speaking at the inauguration of a 22-member implementation committee for the development of bio- fuel in Accra.

Ghana is compelled to hasten her plans to produce bio-fuel in commercial quantities as a result of escalating world crude oil prices, which hit 70 dollars per barrel this week. The world price had risen by more than 200 per cent in the past three years from 24 dollars a barrel in 2002.

Prof. Oquaye said: "The escalating world oil market prices have serious repercussions on national developmental efforts.

"...This situation calls for frantic effort to ensure the reduction of fossil based fuel use in the country," he said.

Prof Oquaye described the inauguration of the committee as timely and said the government would ensure favourable fiscal and regulatory regimes to achieve effective private sector participation in the development of viable substitutes to fossil fuel within the shortest time.

Bio-fuel is produced in the form of bio-diesel and bio-alcohol and is a renewable energy resource extracted from crops like soyabeans, sugarcane, corn, rapeseed, palm nut, cottonseed, sunflower and Jatropha among other sources.

Countries that have made inroads into the production of bio-fuels include Brazil, Malaysia and Mali.

The European Union has the current largest bio-fuel industry with directives to member states to set indicative targets or bio-fuel sales of two per cent in 2005 and 5.75 per cent by 2010.

The directive is expected to create a market demand of 10.5 billion litres (approximately 9.5 million tonnes) of bio-diesel by 2010.

According to Prof Oquaye, Ghana is fortunate to have favourable climatic and soil conditions for most of the crops used in the production of bio-fuel.

He said most vehicle manufacturers warranties extend to a five per cent-10 per cent bio-diesel and regular diesel blend.

The mixture, he said, required neither investment in new distribution infrastructure nor the redesign of motor vehicles.

The Minister mentioned some of the advantages of bio-fuels as low carbon monoxide emissions and urged the committee to live up to expectation by developing the required policy.

The committee is also expected to come out with guidelines to facilitate and regulate regimes for the production of bio-fuel with emphasis on liquid bi- fuel such as bio-diesel and bio-alcohol as substitute for diesel and petrol.