The AP government has recommended the company's proposal for
external funding of its Rs 14.84-crore bio-diesel project to
the Centre for its approvaL The recommendation is the first-of-its
kind by any state government.
Bio's bio-diesel funding gets a boost.
K BALARAM REDDY
Hyderabad, 4 May
The state government has recommended Southern
Online Bio Technologies Limited's proposal for external funding
of its bio-diesel project to the Centre for its approval. The
recommendation of the project is the first-of-its kind by any
The Rs.14.84-crore project is being appraised
by a German financial institution, German Technical Cooperation
(GTZ). Around Rs 6 crore is being raised through internal accruals,
while Rs 9 crore is to be mobilised either through debt or equity.
GTZ has linked any funding to the condition of an approval from
the central government.
Southern Bio plans to set up the bio-diesel
plant at Samsthan Narayanpur in Nalgonda district. The plant
will produce 30 tonnes or 32,000 litres of bio-diesel per day
from oil bearing seeds such as pongamia pinnata, jatropha curcas,
etc. Raw materials can also be acid oils, distilled fatty acids
and animal fatty acids. The commercial operations are to commence
in April 2005. The project is expected to be scrutinised by
the Union government within a month.
The Environment, Forests, Science and Technology
Department of Andhra Pradesh has informed the Union Ministry
of Environment and Forests that "the Government of Andhra
Pradesh is in full agreement with the environmental, social
and sustainable development objectives of the project, and have
assured the proponents of full support and co-operation to make
this first commercial bio-diesel project a success... It is
good for the environment, the country's economy, and for the
tribal poor and small farmers in the state. Therefore, the Andhra
Pradesh government recommends the project for host country approval."
"The annual requirement of seeds forthe
plant is around 32,000 tonnes of seeds. However, the current
availability of seeds in the state does not exceed 4,000 tonnes.
Till such time there is total availability of seeds, the company
would use other raw materials like acid oils, distilled fatty
acids, animal fatty acids and non-edible vegetable oils like
neem, rice brawn etc," Southern Bio Managing Director N.Satish
He said that the company would shortly enter
into Memoranda of Understanding (MoUs) with Andhra Pradesh Forest
Development Corporation, the state forest department, Girijan
Cooperative Corporation and AP Society of Elimination of Rural
Poverty (Velugu) for procuring raw materials. Keeping in view
the shortage of seeds, the company has also initiated negotiations
with Saba Foundation of Malaysia to procure crude palm oil.
"Southern Bio has offered to purchase the
seeds at Rs 4.50 per kg irrespective of quality of the material.
In the case of fatty acids and acid oils, the company will procure
them at Rs 15-16 a kg as against the prevailing prices of Rs
l2-l4 a kg. The end product (bio-diesel) will be sold at 50
paise less than the prevailing high speed diesel (HSD),"
The company has received expression of intent
from various bodies to buy bio-diesel. The railways, which consume
about two billion litres of HSD, plans to substitute five per
cent of HSD with bio-diesel in the coming years. It expressed
its interest in procuring bio-diesel from Southern Bio.
AP Lorry Owners Association offered to buy 12,500
litres per day of bio-diesel, while the Rig Owners Association
of Andhra Pradesh expressed desire to procure 5,000 litres per
day. Visakhapatnam Municipal Corporation has also expressed
its desire to buy 20,000 litres ofbiodiesel per month from the
company. Apart from being cheaper than HSD, bio-diesel will
have to meet the quality norms of American Society of Testing
the state government is also planning to persuade the Andhra
Pradesh State Road Transport Corporation (APSRTC), Municipal
Corporation of Hyderabad and the state secretariat to use bio-diesel
for their fleet in a phased manner, Tishya Chatterjee' the principal
secretary (environment & forests), stated in a letter to
the Union Ministry of Environment and Forests.