Bio-diesel sale by private manufacturers permitted

The government Friday allowed private manufacturers of the environment friendly bio-diesel to sell directly to bulk consumers like the Indian Railways.

"The union cabinet chaired by Prime Minister Narendra Modi, today (Friday) gave its approval for amending the Motor Spirit and High Speed Diesel control order for Regulation of Supply, Distribution and Prevention of Malpractices dated December 19, 2005," a cabinet communique said here.

"The amendment will allow private bio-diesel manufacturers, their authorised dealers and joint ventures of oil marketing companies (OMCs) authorised by the Ministry of Petroleum & Natural Gas (MoP&NG) as dealers and give marketing/distribution functions to them for the limited purpose of supply of bio-diesel to consumers," it added.

Previously, only state-run oil companies and those private firms investing Rs.2,000 crore in oil production were allowed to retail petrol and diesel. Bio-diesel came under this category.

The Rs.2,000 crore investment condition will also be relaxed with a new clause added to give marketing rights for bio-diesel to the private bio-diesel manufacturers, their authorised dealers and joint ventures of oil marketers authorised by the petroleum ministry for direct sales to consumers, the statement said.

The changes were made to address problems users faced in sourcing bio-diesel.

"This decision will encourage the production and use of bio-diesel in the country," the statement said.

The government had in January 2006 announced a bio-diesel purchase policy to encourage production and use by blending it with diesel.

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