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Satish Lele

Biodiesel in India

Oil Marketing Companies had offered a base price of BioDiesel at Rs. 106 per liter, in first Expression of Interest, in July 2022, produced from raw material other than UCO as raw material. Now in March 2023, it is reduced to 86.67 per liter. GST will be charged at 5%. When Biodiesel was bought at Rs. 106 per liter, prices of Acid oil, Palm Stearin, Animal Tallow shot beyond Rs. 95 per liter. It benefited the parties selling oil, and BioDiesel Manufacturers could not afford the price.
In latest tender base price is not indicated. Bidders to offer the price. Considering price of Raw Materials (Palm Stearine and Animal Tallow), reasonable price ranges from Rs. 100 to Rs. 105 per liter of Biodiesel.

To see Latest Tender for Procurement of BioDiesel issued by Oil Marketing Companies: July 2022   October 2022   January 2023   February 2023   March 2023   May 2023
Expressions of Interest: July 2022   July 2022  October 2022
General Conditions in all the tender.: General conditions

    Oil marketing companies buy Biodiesel at Depots mentioned in the latest Tender. Their conditions are
  1. Minimum supply should be 100 Kiloliters at any depot.
  2. It should be as per IS Stanadard, IS 15607 : 2022.
  3. It should be delivered to their depots.

Most of the small plants, set up all over country, will find it difficult to fulfil these conditions. Since BioDiesel will be bought at Rs. 106 per liter, prices of UCO, Acid oil, Palm Stearin, Animal Tallow has shot up beyond Rs. 95 per liter. It will benefit the parties producing raw materials, and BioDiesel Manufacturers may not afford the price. The raw material price rise will also put small scale cottage soap industry to shut its shops (Production of soap in India is 800,000 tons per year).

To produce BioDiesel as per Indian Stanadard, IS 15607 : 2022 (or European Standard), you need to install Ultrasonic or Shock Wave generator. Also you need to use Centrifugal Separators for better separation. These two equipments are expensive. Installing these is not viable for plants having capacity less than 30,000 liters per day. However US Standard ASTM D-6751, can be achived without these two costly equipments.

Another hazard for small plants is, control of Methanol Storage. If not controlled properly, it may find its way to illicit liquor and deaths of poor people.

"Water White" Biodiesel, mostly sold in Gujrat (especially in Surat), India, by BioDiesel Pumps is not BioDiesel. It is also sold as "Industrial Fuel" and used in vehicles on 100% basis in large transport sector. It may not contain any Fatty Acid Methyl Ester or FAME (BioDiesel). BioDiesel has light to dark yellow colour. It may contain other Bio products. "Water White" Biodiesel may be a blend of a number of petroleum products like, Mineral Turpentine Oil (MTO) and other colourless esters, (with lower viscocity,) like Methyl Acetate, Ethyl Acetate etc. These do not smell like oil.

    The properties of Mineral Turpentine Oil (MTO) Compare well with Diesel. It is widely adulterated with BioDiesel to reduce its viscocity.
  1. Calorific Value (KJ/Kg): 44000 (Diesel) 44000 (MTO)
  2. Flash Point oC: >53 (Diesel) 35 (MTO)
  3. Specific Gravity: 0.83 (Diesel) 0.85 (MTO)

India is a diesel-deficit nation and demand has far outstriped supply. India's diesel production will not be able to keep pace with the rapidly growing demand. With rising crude oil prices, it will have heavy toll on our Import / Export Trade. Government's pricing policy allows State owned Oil companies to decide prices of Diesel. Diesel price is comparable to petrol. Diesel demand in the country is growing at an annual rate of 8%. At this rate India will need a brand new 9 Million Tons per year refinery every year. The automobile industry has estimates that the share of diesel cars, in overall car sales had crossed the 40% mark in past. It is now declining due to comparable price of Diesel. The price of fuels is now going to be in line with price of crude oil. Hence the Petrol and Diesel prices are now in line with international price levels, which makes BioDiesel economically attractive.

First Indian BioDiesel Policy was announced on 23rd Dec 2009. BioDiesel Policy gives a rough guideline, which was actually proposed many years back. Main stumbling blocks are still not resolved. There are no Figures or Financial commitments. Some of the points are:

  1. The Minimum Purchase Price (MPP) for BioDiesel by the Oil Marketing Companies (OMCs) will be linked to the prevailing retail diesel price.

  2. Financial incentives, including subsidies and grants for BioDiesel, may be considered based on merits for new and second generation feed stocks, (Used Cooking Oil and Acid Oil), advanced technologies (Acid or Enzymatic Esterification) and conversion processes for BioDiesel, and production units of BioDiesel, based on new and second generation feed stocks.

  3. Biodiesel now has "Goods and Services Tax" (GST) of 5%. No other Central taxes and duties are proposed to be levied on BioDiesel and bio-ethanol except GST.

New Diesel Cars are Hitting the Road Everyday.

    India's biodiesel processing capacity is estimated at 600,000 tons per year. The government owned Oil Marketing companies had floated tenders again and again to buy millions of liters of BioDiesel. However there were few interested suppliers. They prefer to sell directly to consumers, (Exports are not allowed) rather than selling to oil marketing companies in India. Biodiesel manufacturers can sell as 100% Biodiesel. BioDiesel in India was virtually a non-starter in past. There are many reasons for that. The Main Reasons are non-availability of used vegetable oil, very strict Indian Biodiesel Standard (IS 15607 : 2022) and Government's Policies. Tenders for BioDiesel are likely to Fail again and again, due to

  1. Non Availability of Oil
    • In India edible oils are in short supply, and country has to import up to 70% of edible oil requirements (imports are now partly offset by Bumper Crop of Soy). Hence prices of edible oils are higher than that of Petroleum Diesel. Due to this, these edible oils are not viable and hence use of non-edible oils was suggested for BioDiesel manufacture. Palm Stearin separated from imported Crude Palm Oil (CPO) from Malaysia or Indonesia is a good source of raw material for biodiesel. Animal tallow is also available in large quantities. Acid oil is mostly favoured by soap and cattle feed industry.

    • Even though the consumption of Edible oils in India is high, the availability of used cooking oil is very small. Most of the oil is used to extract spices in oil (Tadka), for cooking of vegetables or for preparation of Currys. It can not be recovered. Cooking oil used by bulk users, as Frying oil, is used till the end.

    • Indian Culture uses vegetable oil lamps for lighting in homes and in temples (like candles in other cultures). When prices of edible oil shot up, some people turned to a bit cheaper non-edible oils. The requirement of this sector is more than 15 million tons (also as BioKerosine). Non edible oil seeds are available for 2 or 3 months during harvesting. Since non edible oil seeds can be collected and crushed, using hand operated expellers, in a small scale in villages, the use of non-edible oils for lamps is picking up very fast. This is important use of oil, for millions of Rural Indians. This is depriving BioDiesel industry its supply of oil.

    • All over the world Edible oils are used for manufacture of BioDiesel. These are Rape seed oil in Europe, Soy oil in Americas and Palm oil in South East Asia. Rape seed and soy are grown for its de-oiled meal as cattle feed and oil is not important. Hence these oils were in excess in past, and had to be disposed off at lower prices. Hence initially these edible oils were a viable raw material for BioDiesel manufacture and a lot of manufacturing units came up in US and Europe, based on these oils. Now excess oil is commited, and fresh sources need to be developed.

    • Collection of non-edible oil seeds is a manual operation, and for a large BioDiesel plant, collection is a logistical nightmare. These non-edible oil seeds are collected in 2 to 3 months, when fruits ripen, and seeds need to be stored to run a biodiesel plant through the year. This puts a financial load on biodiesel manufacturers. In a day, a person can collect up to 80 kilograms of seeds, which can produce 20 to 23 liters of oil. The collection is done for 3 months, once every year. For a 100 tons per day (8 million gallons per year) BioDiesel plant, you need 15,000 people to collect the seeds. Collecting and organizing such a large part time manpower is a challenge.

    • The price of Seeds of Jatropha is very high. At this price, the manufacturing cost of BioDiesel is more than the price of Petroleum Diesel at pump. Prices of non-edible oil seeds are down now and oil is viable as a substitute for kerosine.

    • Most of the edible oils that are used currently for manufacture of BioDiesel, are Stable (do not get rancid or do not dissoclate to form free fatty acids). These do not decompose much on storage. Hence these are preferred for Trans-Esterification Process. Non-Edible oils are not that stable, and need a lot of pre-treatment adding to the cost of manufacture of BioDiesel. Rice Bran oil with upto 50% free fatty acids can be used as lamp oil, or for manufacture of soap.

    • The use of lamp oil is increasing rapidly in India, as there is no reliable electrical power supply in rural areas. Soon people will face shortage of these oils for lighting purposes.

    • Cottage Washing soap industry can use vegetable oils with high free fatty acid contents (Acid Oils). Since prices of edible oils have doubled, many soap manufacturers in unorganized sector, are using these Acid Oils as these are a bit cheaper. Large quantity of Rice Bran oil is not recovered, as it has high free fatty acid content. However, it can be extracted by solvent extraction process, for use as a raw material for manufacture of soap.

    • There are billions of other trees (Karanj, Mahua, Neem), all over India, with oil bearing seeds. Traditionally Karanj (Pongamia Pinatta) is planted along the Highways, Railways and Canals to stop erosion of soil. Petrol Pump owners along the highways, buy these oils, pack them in 1 liter bottles and sell as fuel lubricants. Neem (Azadirachta Indica) is planted everywhere for purification of air. Mahua (Madhuca Indica) and Sal (Shorea robusta) grow wildly in Forests. Collection and Processing mechanism for these seeds is now being fully developed. Still many seeds lie on the ground (and ultimately get converted into BioFertilizer).

  2. Government's Policies
    • Under "Make in India" policy, imports of BioDiesel and Used Cooking Oil are Restricted, which has created constraints on supply of main Raw Material (1,050 liters of Fresh Cooking Oil, Used Cooking Oil or Acid Oil is required for manufacture of 1,000 liters of BioDiesel). When Refined Cooking Oil is produced, some oil is rejected, which is called "Acid Oil". Acid Oil, Palm Stearin and Animal Tallow are raw materials available in India, for manufacture of BioDiesel. Acid Oil produced is around 5 to 7% of Refined Cooking Oil. Acid oil contains 5 to 10% or more of Free Fatty Acids.

    • Oil companies had declared their own BioDiesel Purchase Policy. These companies offer a price which is far less than the manufacturing cost of BioDiesel.

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