Cabinet nod for private firms to supply biodiesel to consumers

 

The Union Cabinet on Friday gave approval for a proposal that allows private bio-diesel manufacturers, their dealers and authorised joint-venture companies of Oil Marketing Companies to sell the fuel directly to consumers.

For this, the Cabinet  approved amending the Motor Spirit and High Speed Diesel control order for Regulation of Supply, Distribution and Prevention of Malpractices Act of 2005. The government will also relax the investment and production conditions as specified in the Marketing Resolution Act of 2002 of the petroleum ministry. A new clause will be added in the regulations to give marketing rights for Bio-diesel (B100) to the private biodiesel manufacturers, their authorised dealers and authorised JVs of OMCs for direct sales to consumers. 

The Cabinet has also decided to amend the National Policy on Bio-fuels for facilitating the decision. "This decision will encourage the production and use of bio-diesel in the country," the government said in a statement.

The oil ministry announced a Bio-diesel Purchase Policy, effective from Januay 2006, to encourage production of bio-diesel in the country for blending it with diesel with the objective of increasing energy security and meeting other emission and environment objectives. 

Under this Policy, OMCs are to buy Bio-diesel (B100), meeting fuel quality standard prescribed by the Bureau of Indian Standards (BIS), at a uniform price, as decided by the OMCs from time to time, for blending with HSD to the extent of five percent, at identified purchase centres across the country.

Public sector OMCs had entered into pacts and formed JVs for cultivation of bio-fuels species on revenue wasteland and degraded lands in the State. These JV companies have been formed to increase  production and marketing of Bio-diesel in the country. They had sought permission to undertake activities like sourcing, trading, supply, distribution and marketing of Bio-diesel to consumers.

As the price of diesel is already deregulated and determined by the market, there is no economic justification in preventing private biodiesel manufacturers, their authorised dealers and JVs of OMCs from selling biodiesel directly to consumers subject to their product meeting prescribed BIS standards, the government said.