The future is green for biofuels

Bio-ethanol industry set to see investments worth Rs 30,000 crore

With the ministry of petroleum and natural gas trying to bring down the import of crude oil by betting big on biofuels as a substitute, the bioethanol industry is set to see investments worth about Rs 30,000 crore in the next three to four years in 28 second-generation bioethanol plants.

Of the 28, 16 will be in the private sector and 12 in the public sector.

State-run companies such as Hindustan Petroleum Corporation (four), Indian Oil Corporation (three), Bharat Petroleum Corporation (three), Mangalore Refinery & Petrochemicals (one) and the Numaligarh refinery (one) are ready with their road map in this regard. 

Private-sector companies such as CMC Biorefineries, Jab Inogi and Chempolis are also in the business.

Other private-sector companies are also in the process of setting up units. This will help in increasing ethanol blending from 4.3 per cent now to 8-10 per cent in 2020-21. India’s bioethanol programme got a push after Dharmendra Pradhan took charge as petroleum minister. 

“In the next three to four years, India is set to come up with 28 bioethanol plants. A memorandum of understanding with public-sector undertakings to set up 12 plants in 11 states is in place. This is likely to see an investment to the tune of Rs 28,000-30,000 crore,” said Y B Ramakrishna, chairman, working group on biofuels, ministry of petroleum and natural gas. The first second-generation biofuel refinery in India will be set up by Hindustan Petroleum Corporation at Bathinda in Punjab.

In March 2015, Prime Minister Narendra Modi had set a target of bringing down the share of imports in India’s domestic crude oil requirements by 10 percentage points to 67 per cent by 2022, India’s 75th year of Independence. 

According to the ministry of petroleum estimates, the biofuel business in India is expected to touch Rs 50,000 crore by 2022, from Rs 6,000 crore now. 

Public-sector oil-marketing companies, which are supplying 4.3 per cent ethanol-blended fuel now, procure 1.2 billion litres of biofuel. With a target of five per cent biodiesel blending by 2022, the industry is likely to have a demand of 6.75 billion litres with a business size of around Rs 27,000 crore. 

On the other hand, for 10 per cent ethanol blending, the requirement is likely to be 4.5 billion litres with a business size of Rs 23,000 crore. 

Currently, 3,700 outlets in the country supply biodiesel, and the ministry aims to have 10,000 outlets by August. India has an installed capacity of 1.2 million tonnes of biodiesel. In order to boost investment in the sector, the government is planning viability gap funding, pump in money to support supply chains, and provide 15-20 years of offtake guarantees to the companies setting up biofuel plants.