GOCL lines up Europe foray, deal with IOC off

Gujarat Oleo Chemicals (GOCL), Ankleshwar-based largest bio-diesel producer of India, has decided to explore bio-diesel market in Europe as it supply arrangement with Indian Oil Corporation has come to an end because of lower price.

Talking to Business Standard, Santosh Pathak, chairman of GOCL, said, "We have secured orders worth Rs 50 crore from two oil companies in Europe."

Both the companies are based in UK and France respectively.

Although Pathak declined to disclose the names of the companies he said bio-diesel that will be supplied to Europe will be made out of recycled industrial oil and jatropha.

He said, "We will be exporting 30,000 tonne of bio-diesel to Europe." The first consignment will be dispatched in September 2006, he added.

Elaborating further about the non feasibility of the bio-diesel price fixed by the government, he said, "The bio-diesel costing Rs 25 per litre is financially non -viable as raw material like jatropha and castrol cost us Rs 30 to derive one litre of bio-diesel."

He added that IOC has expressed their inability to purchase bio-diesel at Rs 54 per liter. According to Gujarat Oleo, IOCL agreed to pay Rs 54 per liter for bio-diesel since 2004 when it bagged an order from IOCL.

The order to supply bio-diesel was worth Rs 25 crore and company was supplying on an average 40,000 litre a month of bio-diesel to IOC. "IOCL has stopped taking delivery of bio-diesel from our company for last seven months after the government formulated the purchase policy in October 2005."

"This is one of the major reasons that made us to venture into the European market," he added.

In October, 2005 Under the Bio-Diesel purchase policy it was announced that government would buy bio-diesel at Rs 25 per liter. The policy has come in effect from January 1, 2006.

Further he said the bio-diesel supply order with IOC has been extended to December 2007, which was schedule to be expired by December 2006.

"Even after the extension of supply order, the IOC is not taking the delivery of bio-diesel as they now want to pay Rs 25 per litre price for bio-diesel as per price fixed by the government, which is not feasible," said Pathak.

Currently, the company is supplying bio-diesel to ONGC at Rs 45 per litre and to Gujarat State Road Transport Corporation at Rs 36.

In order to safe guard the environment and develop alternative source of energy, the government had formulated a policy where the oil companies has to mix 5 per cent bio-diesel (B5) with petrol and diesel.

Pathak said, "Been a bigger player we are the only supplier of bio-diesel to IOC in accordance to AHTM standards of bio-diesel."

At the price of Rs 25 it seems a distant possibility that any other player will supply bio-diesel to IOC, he added.