By Rutam Vora (Commodity Online)
Even as the ministry of new and renewable energy (MNRE) has set its eyes to develop coordinated R&D projects for second generation bio-fuels, the ground reality of the nascent industry of bio-fuel suggests that more of the encouragement for private investment is required in order to meet the desired goals of creating alternative energy sources.

In a recent statement, the union minister for new and renewable energy, Dr. Farooq Abdullah had mentioned that the government has initiated steps to expedite promotion and development of bio-fuels such as bio-ethanol and bio-diesel.

The government is said to be considering a regulation which would make it mandatory for all oil companies to sell diesel with 20% blend of bio-diesel for retail market by the year 2017. But looking at the pace of development on the R&D and investment front, only a marginal part of the fixed percentage seems to be achievable. The blame goes to sluggish approach of the government to attract required investments for projects.

“Our diesel demand is growing rapidly and considering this exponential growth in demand over the years, there will be a need of about 16 million metric tonnes of bio-diesel in 2017 to meet the prescribed regulation of 20% blending with normal diesel. But looking at the current scenario of investments happening in the industry, it would be very difficult to meet the set targets,” said CS Jadhav, Director, Marketing Nandan Bio-Matrix Ltd – a company that is currently operating into bio-diesel manufacturing from Jatropha cultivation. “Looking at the current pace of capacity generation, it seems that we would hardly be able to meet the blending requirements of even 3.5%,” told Jadhav in an interaction with Commodity Online.

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Nandan Bio-Matrix is one of its kind cases in India, who has a vertically integrated value chain. The company operates through seed to oil integration. The company has tied-up with the Bharat Petroleum Corporation Ltd (BPCL) for bio-diesel refining and marketing in Uttar Pradesh. The project is believed to start yielding output in next 1-2 years.

The company has joined hands with Gujarat-based group to set up a joint venture entity, Vitale Nandan, which operates in Rajasthan and Orissa besides its home state, Gujarat. “Gujarat has been on the forefront for giving land for jatropha cultivation. We are planning to set up plantation on about 20,000 hectares of land. But initially we will start off with about 4,000- 5,000 hectares of land,” said Rituraj Pathak, director of the company. The company has already procured the land and will soon start commercial cultivation on it.

“We have successfully completed our field trials, which was done in association with Dantiwada Agriculture University in Gujarat. Now we are looking to expand our plantation in states like Rajasthan and Orissa. We are expecting bio-diesel production of about 2,000-5,000 gallons in next 3-5 years, with our revenues rising ten folds during this time.” Pathak mentioned.

Industry experts have expressed their apprehensions about the success of government initiatives to address the need of the growing industry. On one hand, it has set target of 2017 and on the other presently, there are only a few organized players to cater to the vast market in India.

The Minister’s statement to develop coordinated R&D projects on second generation bio-fuels such as production of ethanol from agricultural wastes / residues and bio-diesel from algae, barely mentions the directions for investors. He said in the Lok Sabha, “The National Policy on Bio-fuels is aimed at accelerated promotion and development of bio-fuels such as bio-ethanol and bio-diesel.”

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The oil marketing companies (OMCs) have been directed to sell five per cent ethanol blended petrol in the entire country except North-Eastern States, Jammu & Kasmir, Andaman & Nicobar Islands and Lakshdweep. However, Bio-diesel is currently not being marketed commercially for blending with diesel as the bio-diesel industry is still at nascent stage of development. Hence, the government is emphasizing more on extensive R&D through different Scientific Agencies on feedstock development, conversion processes and production of ethanol mainly from sugarcane molasses and bio-diesel from Jatropha.

Experts are of the opinion that right mix of policy backed by incentives, will prove a booster for the industry. Many private equity firms are waiting to offload funds for the future blue-chip ventures. Tatas and Reliance have already expressed their readiness to park their funds in this promising sector. Australian renewable energy major, Mission Biofuels Ltd is also considering venturing into this field.


Vora is a Special Correspondent, Commodity Online News Service

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