RIL plans bio-diesel refining plant

Rs 2,000 crore investment in the pipeline.

Reliance Industries Ltd (RIL) is planning to set up a bio-diesel refining plant near its existing 33 million tonne per annum (MTPA) crude oil refinery at Jamnagar, Gujarat.

The plant is expected to be ready for production by 2008, around the same time when the proposed 27 MTPA Reliance Petroleum refinery gets completed at the Jamnagar special economic zone.

Bio-diesel is made by blending the extract of jatropha, a small tree or shrub with a smooth gray bark, with regular diesel through a specific process.

RIL had some time ago embarked on massive cultivation of jatropha. It has earmarked 200 acres of land at Kakinada in Andhra Pradesh to cultivate jatropha.

"The area of cultivation will be increased, depending on the progress of the project. The major cost in bio-diesel is the acquisition of land," sources said. The cost of the project, including the cultivation of jatropha, will be around Rs 2,000 crore.

The capacity of the proposed plant is not known. Sources close to the development said the company would use 2 per cent of the diesel produced in the existing refinery as input for the bio-diesel.

This will be scaled up depending on the increase in demand for bio-diesel. RIL will distribute the fuel through its outlets. It has 1,218 outlets across the country and has received approvals for setting up 5,849 more. RIL executives refused to divulge details of the project.

However, sources close to the developments said RIL would invest Rs 500 crore for the plant and Rs 1,500 crore for jatropha cultivation and extract development.

Reliance Life Sciences, a group company, will supply the know-how, saplings and fertilisers for farmers to cultivate the crop.

The government of India has a $300 million bio-fuel programme in place. It plans to raise the bio-diesel usage to 20 per cent of the total diesel usage by 2011, compared with the present two per cent.

Planning Commission Deputy Chairman Montek Singh Ahluwalia recently spoke about offering tax incentives to make bio-fuels economically feasible. The incentives will be in the form of sales tax and excise incentives.

Several Indian companies are already working towards developing bio-diesel. Recently, global energy major British Petroleum announced that it would fund the bio-diesel project in India.

The 10-year project would cultivate around 8,000 hectares of wasteland to produce 9 million liters of bio-diesel per year. Indian Railways is also planning to produce bio-diesel.