Indian bio-diesel attracts European investors

One of the principal reasons is that European farmers are being weaned away from subsidies on bio-diesel sources like rapeseed and new sources can be secured only from countries with large and diversified oilseed bearing plant base like India.

Several Indian companies, like the bio-diesel project of Hyderabad-based Nandan Bio Matrix, have already well-established business models in place, offering consultancy to farmers, cultivation support, research and development (R&D) of clonal technology, processing and extraction, value addition, manufacturing and marketing, of the product.

Nandan is taking up jatropha cultivation on 5,000 acres with prompt buy-back assurance and crop insurance, backed up by a refinery and extraction unit, C S Jadhav, director-marketing of Nandan, told Business Standard.

Nandan also grows medicinal plants on 10,000 acres.

Jatropha grows in all environments and has 35 per cent oil content in its seed.

Nandan has tied up with D1 Oils of UK, a leading bio-diesel company with worldwide operations and starv performer on European exchanges.

The D1 joint venture is setting up a state of the art R&D facility for jatropha.

The export opportunity is huge and the European Union market alone is estimated to be worth $2.7 billion by 2010.

A European Union Directive demands that 2 per cent of all diesel consumed in the bloc must be bio-degradable by 2005, rising to 5.75 per cent by 2010.

Nandan's R&D effort is also directed towards development of medicinal applications using the de-oiled cake of jatropha seed and leaves.

While biofuel source rapeseed oil was being sold for 380 pounds a tonne, the cost of oil produced from jatropha plantations was half of that, said D1.

D1 Oils aims to export bio-diesel to "premium" markets such as Europe and Japan. Jadhav said India had wasteland of 175 million hectares, which was suitable for jatropha.

Referring to the Planning Commission's demonstration project involving planting of jatropha over 400,000 hectacres at a cost of over $200 million, the UK company said, "D1 is committed to working with the Planning Commission, regional governments and private industry in India to further the cultivation of jatropha and the production and supply of biodiesel refined from jatropha oil throughout India."

Jadhav said the effort to develop the agro-processing sector was being supported by the Synergy Foundation, another UK-based body, which was backing the initiative for its anti-poverty angle and despite the three-year time period it takes for a jatropha plant to reach full maturity.

D1 has accelerated planting targets for jatropha in India and has a joint venture company, D1 Mohan Bio Oils besides several third party off-take agreements in India for the supply of crude jatropha oil through to 2015.

D1 is aiming at a 20-fold increase in the targeted planting of jatropha in India in 2005, with a medium term to plant on 5 million hectares, and option to export up to 25 per cent of the oil produced, said sources.

Additional jatropha oil supply contracts have been signed for exports totaling 10,000 tonnes in 2006, rising to 50,000 tonnes annually by 2009.

A planting of 100,000 hectares of jatropha is expected to yield 250,000-300,000 tonnes of crude jatropha oil per annum. The initial 100,000 hectare jatropha farm would yield revenues of $100m per annum, said D1.

Each hectare could produce around 3,000 litres, which can be blended with conventional diesel to reduce harmful emissions.