• India’s bio-diesel blending for road transport to remain muted in 2019: US Dept of Agriculture

    Ethanol blending in petrol in India is expected to reach a record high of 5.8 per cent in 2019 but the country’s average bio-diesel blending in diesel for road transport is expected to remain muted at 0.14 per cent, the Foreign Agriculture Service of the United States Department of Agriculture said in a report.

    This is due to limited feedstock availability and lack of an integrated and dedicated supply chain coupled with restrictions on imports, it said.

    “The 2019 national average blend rate for on-road transport is expected to be close to last year (one seventh of 1% (0.14%),” the report said. It projected that 85 million litre of bio-diesel is expected to be blended in 2019, as compared to 83 million litres blended last year. India’s National Bio-fuel Policy 2018 had stipulated a bio-diesel blending target of 5 per cent by 2030.

    According to the report, biodiesel consumption in the country has been growing at 4 per cent annually. It is expected to grow at 2.77 per cent to 185 million litre in 2019, as compared to 180 million litre consumed in 2018.

    “The quantity of biodiesel procured for blending with conventional diesel for on-road use will be marginally above last year’s level and continued to account for less than has the estimated market for biodiesel,” the report stated.

    The buyers of blended diesel in India are limited to some retail outlets of oil marketing companies, the Indian railways, State Road Transport Corporation of different states, fleet owners of road transport companies and port authorities.

    India currently has six plants with combined annual production capacity of 650 million liters of biodiesel per year. The production capacity of existing plants range from 11 million liters to 280 million liters, the report said.

    The country’s bio-diesel production is expected to increase 2.7 per cent to 190 million liters in 2019. The fuel is mainly manufactured from imported palm stearin, and small volumes of non-edible oils, Used Cooking Oil (UCO) and domestically sourced animal fats. Feedstock constraint has led to low plant utilization of 29 percent, the report said.

    “While the use of animal fats and tallows has remained constant, the remaining feedstock use has shown steady growth, namely non-edible industrial oil and UCO. Except for later (UCO), currently there is no official regulation on supply of other available feedstocks for biodiesel production,” the report noted.

    The government has been trying to increase the production of bio-diesel. The National Biodiesel Mission (NBM) was initiated in 2009 identifying Jatropha as the most suitable inedible oilseed to help achieve a proposed biodiesel blend of 20 per cent with conventional diesel by 2017. However, using Jatropha proved untenable due to a host of agronomic and economic constraints.

    The National Biofuel Policy of 2018 envisioned the formation of the supply chain or collection mechanisms to increase biodiesel production. The development of a supply chain for UCO has received the most attention in recent times due to its immense potential to source feedstock from the food processing industry, restaurants, hotels, and all food business operators (FBOs).

    According to a government notification, effective from 1 July 2018 all FBOs were required to monitor the quality of oil during frying. Oil Minister Dharmendra Pradhan, earlier this month released an Expression of Interest (EoI) on behalf of the National Oil Companies (NOCs) for procurement of bio-diesel from UCO.

    According to the EoI, Oil Marketing Companies will provide a complete off-take guarantee for bio-diesel produced by UCO in 100 select cities initially. The oil companies have fixed the price of buying bio-diesel at Rs 51 per litre for the first year, Rs 52.7 for the second year and Rs 54.5 for the third year. They will also bear the cost of transportation and GST in the first year.

    Being one of the largest consumers of vegetable oil, India has the potential to recover 220 crore litre of UCO for biodiesel production by 2022, according to the Food Safety and Standards Authority of India (FSSAI).

    According to the report, India did not trade in biodiesel until 2013. “Exports became a significant part of the balance from 2014 through 2016, less so afterward. Imports first became somewhat significant in 2017. Indonesia, UAE, Malaysia, France and China are the main suppliers of biodiesel to India while India’s major export destinations are Nepal, Nigeria, Oman, Philippines and Qatar,” it said.

    OMCs procured 1.55 crore litre of bio-diesel in June this year for blending purposes and the total procurement of bio-diesel in the first three months (April-June) of the current fiscal stood at 2.56 crore litre.

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