Financial Daily from THE HINDU group of publications
Thursday, Aug 18, 2005
Industry & Economy - Non-conventional Energy

Petroleum Ministry wants OMCs to pay Rs 25 a litre for bio-diesel
Our Bureau


Mr S.C. Tripathi (left), Union Petroleum Secretary; Ms Leena Mehendale, Executive Director of the Petroleum Conservation Research Association; and Dr Kirit S. Parikh, Member (Energy), Planning Commission, at the inauguration of Bio-diesel Credit Bank in New Delhi on Wednesday. — Kamal Narang

New Delhi , Aug. 17

THE Petroleum Secretary, Mr S.C. Tripathi, today said that the Petroleum Ministry would like the oil marketing companies (OMCs) to increase the price offered by them to purchase bio-diesel from entrepreneurs for blending with diesel. At a recent meeting with the Ministry, the marketing heads of the OMCs, which have offered to set up 20 depots across the country, have offered a price of Rs 23 per litre.

"While the OMCs have suggested a price of Rs 23 per litre for bio-diesel, we are recommending Rs 25 per litre to provide an incentive to entrepreneurs," he said.

Of these 20 depots, 10 are to be set up by IOC and five each by BPCL and HPCL.

The Secretary also indicated that the Oil Industry Development Board (OIDB) could offer to share 50 per cent of the funds for the projects to be set up by the OMCs.

Speaking at the launch of the Bio-diesel Credit Bank of Petroleum Conservation Research Association (PCRA), the Secretary said that to meet India's oil demand, which is expected to touch 274 million tonnes by 2005, there is a need to tap other sources of energy.

The use of bio-diesel, produced from non-edible oilseeds such as jatropha, for blending with diesel, produced from crude oil, is expected to bring down the volume of imports at a time when global oil prices have touched $66 per barrel.

Diesel usage constitutes over 40 per cent of India's annual consumption of about 120 million tonnes of crude oil, over 70 per cent of which is imported.

Further, to ensure quality procurement, the OMCs will set up laboratories alongside the collection centres to test the quality of bio-diesel being supplied.

Outlining the advantages of setting up the Bio-diesel Credit Bank, the Secretary said that it would provide all relevant information - right from people engaged in the cultivation of non-edible oil seeds to those engaged in collection and processing of bio-diesel to the desired quality of bio-diesel.

Speaking at the function, Dr Kirit S. Parikh, said that once the Bio-diesel Credit Bank is equipped with the desired information, PCRA could submit a clean development mechanism project under the Kyoto Protocol to earn certified emission reduction units (CERs).

These CERs can be traded in exchange for money, which ultimately would be shared by the account holders.