TOIL to set up bio-diesel unit with indigenous tech

The lack of clear-cut government guidelines and successful business models in the biofuels segment have not stopped a city-based entrepreneur from venturing into "the high-risk business of bio-fuels". G Sreenivas, an ex-banker has set up Tree Oils India Limited (TOIL) to manufacture bio-diesel.

TOIL proposes to raise a 500-acre plantation of jatropha and pongamia, which are non-edible tree oil varieties, and set up a two-tonne per day capacity bio-diesel plant near Zahirabad with a total investment of Rs 1.5 crore.

TOIL is in talks with the Indian Institute of Chemical Technology, Hyderabad, Indian Institute of Science, Bangalore, and the Indian Institute of Petroleum and Research, Dehradun for plant, machinery and technology.

Bio-diesel is an output of processing vegetable oils with methanol or ethanol in the presence of a catalyst, usually sodium hydroxide or potassium hydroxide.

Glycerin and de-oiled cakes are the other by-products in the process. Apart from reducing hydrocarbon emissions by 50 per cent, bio-diesel is also known for its superiority to petro-diesel in terms of density, combustion, sulphur content, carbon residues etc.

While the vegetable oils used abroad are edible (soyabean, linseed or rapeseed), in India the use of non-edible varieties like jatropha (adavi amudam or nepalam) or pongamia (kanuga) is more suitable. Jatropha would need only summer irrigation while pongamia is drought-resistant.

Typically, the local Indian vegetable oil varieties find applications only in leather tanning, soap manufacturing etc.

"The indigenous technology will cost around Rs 40 lakh as against Rs 2.25 crore for technology sourced from abroad," Sreenivas said.

Besides, the Indian technology is tested on jatropha and pongamia, as against equipment sourced from abroad to process other seeds like rapeseed, soyabean or linseed, he said. The central government's bio-diesel programme aims at mixing five per cent of bio-diesel with high-speed diesel in nine states from January 1, 2005 subject to availability of bio-diesel in sufficient quantity.

India imports 72 per cent of its domestic crude oil requirements and the import bill for crude oil is around $14 billion per year. With the increased production and use of bio-diesel, the country is expected to become self-sufficient in automobile fuels in 20 years, he said.

However, there are no policy guidelines from the government on production, marketing and the pricing of bio-diesel.

"Serious doubts are being cast by banks on the feasibility and viability of the project in view of the low margins, untested production processes and the market opportunity that bio-diesel represents. Pricing policies or new taxes could affect the business adversely. The business is right now a high risk venture," Sreenivas said.