Addressing the World Bio-fuel Day celebrations in the capital, he said the country is targetting 10 per cent blending of fuel with ethanol by 2022, while this may be increased to 20 per cent by 2030. This is expected to lower the country’s import bill, which is currently expected to rise 24 per cent from $88 billion in 2017-18 to $109 billion in 2018-19, considering an average Indian basket crude oil price of $65 a barrel.
This comes at a time when India is planning to come up with 12 biofuel refineries with an investment of Rs100 billion. The country is also targetting 5 per cent biofuel blending by 2030, as part of the National Policy on Biofuels. The government had reduced goods and services tax (GST) on ethanol and biodiesel from 18 per cent to 15 per cent and 12 per cent, respectively.
Modi added that ethanol production in the country would increase three-fold to 4.5 billion litres by 2022 from 1.41 billion litres now. Currently, India is dependent on imports to meet 80 per cent of its energy requirement.
Modi said the country is currently saving around Rs40 billion in foreign exchange due to the ethanol blending programme, which is also saving the environment. The 12 upcoming refineries will be owned by state-run companies like HPCL (four), IOCL (three), BPCL (three), MRPL (one) and Numaligarh refinery (one).
On the other hand, private sector companies like CMC Biorefineries and Jab Inogi are coming up with 10 units each, while Chem Polis is set to come up with one unit. A few other private sector companies are also in the process of setting up units by 2022. Out of the total 28 projects in the pipeline, 16 will be from private sector and another 12 from the public sector.
"The ethanol blending programme was started during the Vajpayee government. But previous governments did not take the programme seriously," Modi said, taking a dig at the Manmohan Singh regime. In March 2015, Modi had set a target of lowering import dependence in oil by 10 percentage points to 67 per cent by 2022, when India will celebrate its 75th year of Independence. According to the ministry of petroleum estimates, the biofuel business in India is expected to touch Rs500 billion by 2022, from Rs60 billion at present.
In order to boost investment in the sector, the government is also planning viability gap funding to support supply chain and provide 15-20 years of offtake guarantee to companies setting up biofuel plants.