Lack of raw material, govt pricing dash biofuel dreams

The biofuel industry is finding it tough to remain in business, with both government pricing and raw material availability working against them.

The government, on its part, has launched a massive programme to develop high-yielding varieties of jatropha, a plant that can grow in wastelands across India, to meet the severe raw material shortage for the green fuel industry.

Senior officials of the National Oilseeds and Development Board (NOVOD) said 76 institutions across the country were engaged in this research. A high-yielding variety should be available in the next two to three years. Forty million hectares of land has been identified by the government for cultivation once these high-yielding varieties are made available.

But the issues are far more complex. For now, the responsibility of developing green fuels for the future rests with several ministries. The Ministry of New and Renewable Energy (MNRE) released a biofuel policy last year. Now, the ministries of petroleum, rural development and agriculture are looking into several implementation issues.

The Ministry of Rural Development has already set up a national mission on biodiesel, while the Ministry of Petroleum is addressing the more complex issues of distribution and pricing. The Ministry of Agriculture, along with the Department of Biotechnology, is looking at new research in these areas.

So much in the planning process is not quite helping business. President of the Biodiesel Association of India, Sandeep Chaturvedi, said: “Biofuels are meant to provide sustainable rural development. The national policy on biofuels is a very well-intentioned policy document. People have put in a lot of money into this industry. But it is just too costly to produce.”

Officials at MNRE conceded there were issues. “It will take time,” an official said.

Chaturvedi said even though the government did not want to make any profits on biofuels, the tax structures varied across the states. For some businesses, it is simply unsustainable.

“Ninety-nine per cent of plants around Kakinada and Hyderabad have closed down,” said a leading manufacturer from western India, whose plant closed over two years ago. An investment of Rs 225 crore had been made. “We are unable to recover our costs at the price fixed by the government,” he said. There are others, who cannot even pay the interest to the banks on their huge borrowings to set up the plants.

Biodiesel production was to be taiken up from non-edible oil seeds in waste, degraded and marginal lands. The focus was on indigenous production of bio-diesel feedstock and import of Free Fatty Acid (FFA) based oil, palm etc was to be stopped. Manufacturers said while import of FFA had been stopped, the non-edible oils were not being made available.