Cont……… - Biodiesel Association of India

Report
MARKETING POTENTIAL FOR
BIODIESEL
UNIVERSAL BIOFUELS PVT. LTD., HYDERABAD, INDIA
(A wholly owned subsidiary of AE Biofuels, Inc., USA)
Nov 19, 2010
Is there a
Marketing Potential for Biodiesel
in India OR from India ?
INDIAN MARKET
Background & Facts
• The GOAL of the Biodiesel Policies was to promote the use of
Biodiesel in India for reasons of Energy Security, Climate
Change Mitigation, Renewability of Biodiesel vs NonRenewability of Fossil Fuels, Environmentally Friendly, etc.
• To promote the Biodiesel industry, Government of India
offered incentives.
-EXCISE WAS EXUMPTED
-VAT, as per the Biodiesel classification
was 4% in most States
• Upon the announcement of incentives, 1500 Cr was
invested across different States in India.
Cont………
INDIAN MARKET
Background & Facts
Cont………
• Presently, industry is operating at 10% capacity or less. It is
today an industry in distress.
• Not a liter of Biodiesel has been blended with Diesel for
distribution as transportation fuel by the OMCs.
• In contrast, EU blended12 Million KL of B100 with Diesel in
2009. This represents approx. 5-7% blending with diesel. If
India were to blend 5% biodiesel, it will need 2.5 Million KL.
Installed capacity of Biodiesel in India is only 1.1 Million KL.
• Biodiesel producers understand that Biodiesel has to be
priced equal to or less than Diesel price, so no under-recovery.
•World-over, Biodiesel is made from edible oils like soya,
rapeseed and palm oil.
INDIAN MARKET
Why did we fail in the Indian market?
•
States revenue-centric focus with ‘zero’ consideration for
Biofuels Policy is the No. 1 reason for the failure of Biodiesel
program in India . States bent on taxing Biodiesel at the rate
of Diesel if blended with Diesel.
• Back-seat approach of MOPNG / MNRE to resolve industry
issues with States.
• MOPNG’s directive to ban Direct Sale of Biodiesel.
• Biodiesel Policy has been structured around Jatropa.
Government must realize that Jatropa has failed as a
commercially viable crop.
Cont………
INDIAN MARKET
Why did we fail in the Indian market?
Cont………
• India’s Hypersensitivity to Food vs Fuel issue. World has
successfully launched biodiesel programs using edible oils.
China & EU are classical examples. They are net importers of
oils/oil seeds, yet have launched a successful biodiesel
programs.
• Non-edible palm derivatives like stearin & PFAD are a NO!
NO! for biodiesel production, yet their use for production of
soaps and other oleo-chemicals is perfectly OK.
EXPORT MARKET
Why did we fail in the Export Market?
• Argentinean Biodiesel producers have a 14% advantage on
the cost of feedstock due to differential export tax between
Soya Oil and Biodiesel. Soya based biodiesel has better cold
flow properties for the EU market and therefore, priced higher.
• Indonesian producers also benefit from the 10% export tax
on palm oil vs no export tax on Biodiesel. Additionally, India
has a inbound freight disadvantage.
• India has come under scrutiny by EU for aiding evasion of
anti-dumping duty imposed on American Biodiesel by rerouting it through India and misdeclaring as Indian origin
product. Guess who?
INDIAN MARKET
What must be done to save the industry?
• Domestic market is our best bet.
• PMO must be approached to intervene, so that States
rationalize VAT on blended Biodiesel, like the Central
Government rationalized Excise. PM is the head of the steering
committee on Biofuels.
• MOPNG must be approached to allow direct sale of Biodiesel,
immediately.
• Biodiesel price in India cannot be fixed like the price of
Ethanol. Feedstock for Biodiesel is not supplied by the
Government at fixed prices. Biodiesel price has to be
commodity linked, either to feedstock or diesel or both.

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