Oil firms plan to set up seven 2G ethanol units for Rs4,000 crore

Second-generation ethanol is produced using non-edible agricultural waste left over after harvesting


Photo: Reuters
Photo: Reuters

State-run fuel retailers Indian Oil Corp. Ltd (IOCL), Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL) will set up around seven so-called second generation (2G) ethanol plants across the country, three people aware of the development said. The plants will be set up at a cost of Rs4,000 crore and will help enhance ethanol availability for blending with petrol.

2G ethanol is produced using non-edible agricultural waste left over after harvesting. This could include corn cobs, rice straw and wheat straw, among others. Currently, technology is available to convert cellulose into sugar, which can later be fermented to form ethanol. 

“The OMCs are in the process of setting up nearly seven such plants in the initial stage. These will be set up at a cost of Rs600 crore each. The plan is currently under the consideration of the ministry of renewable energy and the ministry of petroleum and natural gas,” said an industry official aware of the talks, one of the three mentioned above. He spoke on condition of anonymity as he is not authorized to speak to reporters. These plants, the official added, will produce 100,000-150,000 litres of ethanol per day and correspondingly equivalent bio-CNG (compressed natural gas).

Bio-CNG will be an alternative to diesel. 

These plants will come up at locations close to farm lands, in order to reduce costs. “We are looking for locations where we can set up a blending refinery or depot,” added the third official from an oil marketing company. 

In September, IOCL tied up with Pune-based Praj Industries Ltd to build three 2G bio-ethanol plants with technology developed by Praj. IOCL did not reply to an email sent last week seeking details of the investment in the venture. 

A BPCL official confirmed the plan to build these plants. “In addition to Praj Industries, we are in talks with other technology service providers also to set up two 2G ethanol plants. Location of the plants will be decided in a few months,” the official added. BPCL did not reply to an email sent last week. The country is targeting a more than seven-fold expansion in its biofuel market in the next six years, oil minister Dharmendra Pradhan said on 10 August.

This July, Union minister Nitin Gadkari had said the government will soon come up with a new policy on non-conventional resources as it plans to take up ethanol blending in petrol to 22.5% and in diesel to 15%. He added that this could reduce India’s annual crude oil imports bill of  Rs7 trillion.

“1G ethanol will continue to be the main contributor to the blending programme, besides serving beverage and industrial demand. However, the desired 10% ethanol blending programme calls for alternative feedstocks and hence, the need for 2nd generation cellulosic ethanol (2G) technology,” said Pramod Chaudhuri, executive chairman, Praj Industries in his second quarter address to shareholders. 

READ MORE