Producers to raise biodiesel exports on global price rally

After a 20 per cent rally in crude oil prices from November, biodiesel prices have also started rising globally. Biodiesel prices in Europe rose over 15 per cent, owing to a revival in demand. Indian producers, who mainly rely on export markets in Europe and the United States, are planning to increase exports.

Biodiesel shipments currently fetch exporters around $1,150-$1,200 a tonne. The export demand for biodiesel is usually low during winters, since blenders use lower levels of biodiesel, with cold weather hampering its effectiveness. The demand in Europe has, however, picked up and the market is good. "Prices have firmed up and we are looking forward to export more biodiesel in the coming months, since demand is usually low in winters,” said D S Bhaskar, Managing Director, Naturol Bioenergy's Kakinada-based plant, which exports about 5,000 tonnes every month to European countries. It is the country’s first biodiesel plant with a capacity to produce 100,000 tonnes of biodiesel per annum.

Though India has a biodiesel capacity of around 1.2 million tonnes, there is a lack of large-scale blending. The government's national biofuel policy, which was introduced in December 2009, was aimed at facilitating the development of indigenous biomass feedstock for the production of biofuels. The policy proposed an indicative target of 20 per cent blending of biofuels – both biodiesel and bioethanol – by 2017. While ethanol blending took place between 2006 and 2009 and resumed from November 2010, biodiesel blending could never take off.

Currently, only the blending of ethanol (5 per cent) with petrol is being implemented and there is no blending of biodiesel and therefore, domestic plants cater to the international market. Higher raw material prices, marketing and double taxation by state governments have also not allowed biodiesel blending to grow in India.

Though small quantities were sold domestically to state utilities and diesel power generators, producers say that while diesel prices have been unchanged for more than seven months, the cost of producing biodiesel has gone up due to an increase in input costs.

“While crude oil and prices of our inputs have moved up, diesel prices are static. At the existing price level, biodiesel cannot be sold in the domestic market. We have almost stopped domestic sales and are focusing on exports,” said Srinivas Prasad Moturi, Chairman & CEO, Cleancities Biodiesel, which set up the country’s largest biodiesel plant with a 250,000-tonne capacity in Visakhapatnam.