Monday, May 23, 2005

Bio-diesel Commitments

Green Car Congress points to a news report that the Haryana government has decided, on the basis of a pilot project on 20 buses, that all buses at the Gurgaon bus depot will run on a 5% bio-diesel mix - starting this June. This makes it the first bus depot in the country to issue this directive. Apart from cutting down on pollution and saving foreign exchange, this initiative also gives added impetus to agricultural employment in the state. Haryana farmers apparently are taking to growing Jatropha in a big way.

Though initially the mix is going to be just 5% bio-diesel and 95% conventional diesel, this could be increased to 20% in a few months. Though the report claims other concerns, the core concern should be the cost of the fuel.

Some years back the Vajpayee government had called for global tenders to produce and sell bio-diesel in India in a big way. Only two tenders came up and the lowest price quoted was Rs 100 per litre of bio-diesel. Currently the railways buy or produce bio-diesel and the cost works out to be in the band of Rs 50 to Rs 78 per litre. While this is substantial improvement over the price quoted above we still have a pretty long way to go before biodiesel can compete with petro-diesel on cost.

The biggest avanue for cost-cutting would be the Jatropha seeds, which currently sell at Rs 30 a kg (you need at least 3 kg to make one litre). At this rate the profit per acre is about Rs 80,000 which is much higher than what is got with horticultural products that need much higher maintenance and investment. Considering the low investment and costs, it is likely that that the costs could fall by as much as 80% once Jatropha growing becomes really popular.