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| OMCs may buy biodiesel at Rs 34 a litre |
| Kalpana Pathak / Mumbai Oct 12, 2009, 00:28 IST |
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The government is likely to fix a price of Rs 34 a litre for purchase of biodiesel by oil marketing companies, after biodiesel producing companies agreed to sell the fuel at that rate in a recent meeting between the government's representatives and industry players.
"Most of the biodiesel plants are either running at 5 per cent capacity or lying idle. This move will help put the plants to use. Industry players quoted a price of Rs 36 a litre, but finally agreed on Rs 34," a source from the Biodiesel Association of India said.
India's biodiesel processing capacity is estimated at 200,000 tonnes per year but a majority of biodiesel units are not operational most of the year. "Given current crude oil prices, this price (Rs 34) looks viable. We had asked the government to link raw material prices to finished prices as it happens in other countries, where biodiesel is sold at a discount to conventional diesel since it is cheaper than crude oil," an executive from one of the biodiesel producing companies said.
Commercial production and marketing of biodiesel in India is negligible due to the lack of availability of jatropha seed and other non-edible oil feedstock, according to analysts. Oil extracted from the seeds of the jatropha plant, which can grow in wastelands across the country, is blended with diesel to manufacture biodiesel.
Biodiesel can also be produced from vegetable oils, the primary feedstock for the fuel. But this is not done in India due to food security reasons. Most existing biodiesel producers use mixed feedstock, including non-edible oilseeds, non-edible oil waste and animal or fish fat as feedstock.
"India, which has around 40 million hectares of wasteland available for jatropha cultivation, could replace a tenth of the diesel consumption by 2012, even if only a fourth of the wasteland was utilised," an executive from Indian Oil Corporation said.
India, which imports over 70 per cent of its crude oil requirement, envisaged blending of biodiesel with diesel as a measure to cut the dependence on fossil fuel imports, enabling it to reduce the oil import bill. According to analysts, existing jatropha plantations are years away from being harvested.
The total jatropha plantation area in the country is estimated at around 450,000 hectares and, of this, over 70 per cent are new plantations and would mature in the next four years.
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