Cabinet to take call on methanol policy in next 2 months, may allow import

Demand estimated to reach 10 mn tonnes by 2022, as country plans to expand methanol use as a transportation fuel and for cooking

In a major push to the clean energy mission, the Union Cabinet is likely to take up a comprehensive methanol policy within the next two months. The policy is likely to include proposals to import methanol and addresses subsidy-related issues such as the one involving the use of methanol as a cooking gas.

This comes close to the heels of Assam Petrochemicals initiative to start supplying methanol cylinders to 500-odd families on November 5, using methanol cooking stoves. The fuel costs consumers Rs 600 a cylinder, compared to Rs 809.5 for non-subsidised cylinders in the market. Niti Aayog has also come out with a master plan to introduce methanol as the preferred cooking fuel, reaching out to 50,000 households in Assam and 20,000 below-poverty-line families in eastern Uttar Pradesh. The Cabinet will also clear the setting up of four dimethyl ether (DME) plants in various parts of the country. DME can be a substitute for diesel and liquefied petroleum gas (LPG).

“By 2022, we expect methanol demand in the country to be 10 million tonnes, once we start using it in sectors like transportation, cooking and waterways. To meet this initial demand, we are planning to import one million tonnes of methanol during the financial year 2019-20,” said V K Saraswat, member, Niti Aayog. Though India has a capacity of 1.2 million tonnes, current capacity utilisation is only about 700,000  tonnes.

Major methanol producers in India are Gujarat Narmada Valley Fertilizer and Chemicals (GNFC), Rashtriya Chemicals and Fertilizers (RCF), Assam Petrochemicals and National Fertilizers. India will be looking at countries like Iran, Saudi Arabia, Qatar and China for import of the fuel. The country also plans to tap is huge coal reserves to extract methanol, and is eyeing also stranded natural gas blocks as well. At present, India doesn't have a commercial coal-to-methanol plant. However, state-run Coal India Ltd is working on such a project at Dankuni in West Bengal and a coal-to-gas project in Talcher, Odisha.

The ministry of road transport and highways has now cleared methanol (M15 grade) as a fuel for transportation as well. China and Israel are among the major countries that have accepted methanol as a transportation fuel. According to Niti Aayog, Indian Oil Corporation’s research wing is working on the right blend for using of methanol on vehicles in India. Based on current estimates, a 1,600-tonnes-per-day of methanol plant will require a capital expenditure of Rs 12 billion and would be able to produce methanol at Rs 17-19 per litre.