Centre to Invest 15 Thousand Crore to Expand Panipat Refinery

(Times of India) The Union government will invest Rs 15,000 crore to increase the capacity of Panipat oil refinery in Haryana from existing 15 million tonnes (MT) to 25 MT to raise quality of fuel and create more employment opportunities. Also, an ethanol plant would be set up at a cost of Rs 500 crore by the Indian Oil Corporation (IOC) in Panipat to generate alternative fuel from agricultural residue that would boost the farm sector.

As per scientific research, he said, ethanol made from crop residue can produce fuel or energy up to 72%. READ MORE and MORE (Biofuels Digest) and MORE (Business Standard) and MORE (Financial Express) and MORE (The Hindu)

Excerpt from Biofuels Digest: The key driver? The Indian government’s decision, after many years of hemming and hawing about its renewable fuel ambitions, to push through towards a 22.5% ethanol blending mandate and a B15 biodiesel blending target. That’s up from a hit-or-miss 10% ethanol blend target currently in place.

The concern for years is that India’s sugar industry could not supply sufficient ethanol, or meet targeted prices, or that food-vs-fuel concerns would erupt over the diversion of too much sugar to the energy sector.

Hence, a focus on second-generation feedstocks, and ultimately a focus on ensuring that Indian-based, second-generation technology would be available, and robust.

To that end, we reported in July that the national government was preparing to release its new policy to support biofuel production from non-conventional feedstocks in an effort to boost ethanol blending above 22% and biodiesel to 15%. Anticipated feedstocks included bamboo, rice straw, wheat straw and cotton straw — as opposed to molasses, conventionally used at the present time. Already the government announced in December 2014 that it would deregulate ethanol feedstocks to allow others to be used but this new policy was expected to give that shift a major push to attract investors. And has it ever.

The result of the activity by the government? In August, we reported that the biofuels industry is set to invest $2.25 billion in new projects over the next few years to build up the industry’s value towards $7.5 billion by 2022 thanks to the new policies coming into place that will boost production of cellulosic ethanol and biodiesel. A subsidiary of Bharat Petroleum Corporation announced it would build a 300,000 metric ton biofuel plant, Praj said it would build multiple biorefinery projects valued at $142 million, CVC Biorefinery will set up two projects in Gujarat and Punjab while Munzer Biofuel will set up a biodiesel plant in Mumbai.

By August, we reported that the new policy was imminent. And one component was key — a new way of pricing ethanol, which is regulated in India.

We reported progress early last month when the government finally approved a new ethanol price methodology, and the markets got a surprise when the government signaled that it would cut the linkage between ethanol and crude oil prices. And significantly higher than prices announced in December 2014 that weren’t enough to encourage mills to boost production.

A long, expensive and trying effort at Praj to break through on cellulosic ethanol technology finally paid off with successful demonstration in the past two years, and now the announce of government as well as commercial support.

A key element now is finance. We reported last month that Praj is looking to team up with private equity funds to co-invest in the green fund it will set up to support customers developing second generation ethanol plants. The company announced the fund as well as the development of 10 2G facilities by the various national oil companies. The fund is meant to help reduce risk for the oil companies while giving Praj an opportunity at managed exposure to the projects they build and install.

Bharat Petroleum was one of the first through the gate, with an announce last month that they will build a $75 million second-generation ethanol plant using MSW and agricultural waste as feedstock in Kochi, where it will be located at the BPCL-Kochi Refinery.

The 22.5% ethanol and 15% biodiesel blending mandates are historic wins for renewable fuels — and great news for the companies that have been working to bring their technologies to India, or developing them there. Praj, of course, but think Algenol, Gevo, and LanzaTech too.

Now come what former BP Biofuels CEO Philip New used to call “the hard yards of commercialization” — the translation of ambition into steel in the ground. The good news, the oil companies are investing, the government is providing not only funding but the mandate support. Now, it is a matter of deploying technology — and, most importantly, building the supply chain for the feedstock. READ MORE