Wanted: Bio-diesel policy

By Vishwanath Pillai and Raksha Hegde, CNBC-TV18:

The spike in crude prices has hurt every market. But one industry has taken off and that's alternative fuel, also known as the bio-fuel industry.

Bio-diesel is coming up in a big way in Andhra Pradesh. But the major bottleneck remains to be the availability of feedstock. The industry here wants the government to come out with a comprehensive bio-diesel policy and subsidy for farmers cultivating jatropha.

The Vakalapudi industrial park in the port city of Kakinada is humming with activity. The industrial park has attracted investments worth over 450 crore from bio-diesel firms such as Reliance Industries, Naturol BioEnergy and Universal Bio Fuel. The reason for the rush is that bio-fuel will be the next big bet if crude continues to rise at paralysing levels. Biodiesel is pegged at Rs 50 a litre, Rs 10 less than normal diesel. And the government has thrown in a a subsidy of nearly Rs 20. Hyderabad-based Naturol BioEnergy has already started production and it became the first company to export alternate fuel from India.

Bhaskar Chalsani, CEO, Naturol BioEnergy said, "The policy we have seen in other countries is that they just mandate a blend pecentage of bio-diesel and advise petroleum industries to sell it. India is a huge market. We need such a policy in place in India too."

The other major challenge is the availability of feedstock. The industry relies on imported stock to produce bio-diesel. To avoid this, companies like Naturol BioEnergy is in the process of building jatropha and palm oil resources to source feedstock. It's distributing jatropha seeds free-of-cost to farmers. Till now, the response from farmers has been lukewarm since the crop yield begins from the fourth year onwards.

 Chalsani said, "The primary energy crop, the government and industry is looking at, is jatropha. However one critical aspect missing is the policy. So the government of India has to come out with a clear-cut policy on jatropha. So that the industry, farmers and scientific community have clarity in going forward."