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| 'The future of biofuels remains robust' | | Q&A: SHASHANK INAMDAR, CEO, Praj Industries |
| Pravda Godbole / Oct 12, 2009, 01:07 IST |
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 With the world taking alternative energy resources very seriously, biofuels’ technology company Praj Industries has its hands full in providing solutions for the increasing demand. The Pune-based company currently offers value-added bio-ethanol, bio-diesel, brewery plants and waste water treatment systems for global customers. CEO SHASHANK INAMDAR shares the road map ahead for the company with Pravda Godbole. Edited excerpts:
How are the alternative fuel companies faring against the constant fluctuations in global crude oil prices?
All biofuel companies have to tackle this situation. Recently, when crude prices had fallen to a record low, all the essential commodity prices, too, dropped to a three-year low. Praj has a low cost of transportation and shipping mechanism, which helped us control the cost of execution. Lower petroleum costs mean lower sentiment (demand) for ethanol or renewable fuels.
It would not be correct to say that the price of crude oil is driving interest in ethanol because when the prices had gone upto $140 a barrel, demand for ethanol had not increased. Also, when prices fell, this did not reduce the demand for alternative fuels. The global market is currently subdued. Though the US government has advanced its renewable fuel target of 11 billion gallons from the year 2012 to 2009, this sentiment may not immediately reflect in the market. But over a longer period, this will help in improving the prices of ethanol in the US.
The European Union (EU) Parliament has adopted a Renewable Energy Directive. Will this help alternative fuel companies grow?
This directive mandates 10 per cent biofuel content in transport fuel by the year 2020. This entails an additional 12 to 14 billion litres capacity of bio-ethanol generation per year, globally. This means the consumption will grow by almost five times over the next 10 years and this will create excellent growth opportunities. Many companies were waiting for this mandate to be in place to launch new projects. Praj recently received orders from Mexico, which has also recently mandated 10 per cent blending of bio-fuels in transport fuel, and also from Thailand and Vietnam.
What changes in business development has Praj observed in the wake of price fluctuations?
We have been making efforts to ensure sustainability even in difficult times. On the capital expenditure, too, our investments in research and development were quite high. And we have already spent a large of of this provision.
On the business front, we have still not seen any visible impact. Almost 50 per cent of our business comes from the domestic market and the balance is spread across geographies. However, we are cautiously providing for any eventuality as a fallout of this and have already revised our order book.
How do you see the biofuels industry over the next five years?
Bio-fuels are promoted largely for energy security (as in USA), as well as for environmental reasons. And to create jobs in rural areas (as it is agriculture-based, in South Africa and many South American countries). Hence, the future of biofuels remains robust.
The second generation of biofuels is another area which will give a boost to this sector. We expect that technology development in this sector itself will be a source of growth, as is seen in clear mandates passed by both USA and the EU for supply of biofuels from cellulosic biomass like bagasse, corn cobs, variety of grasses, wood chips, etc. This will provide greater sustainability as well.
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