Govt allows direct sale of bio-diesel by private companies

The union cabinet today gave its approval for amending the Motor Spirit (MS) and High Speed Diesel (HSD) Control Order, which regulates the supply, distribution of motor fuels, to allow private biodiesel manufacturers, their authorised dealers and joint ventures (JVs) of oil marketing companies (OMCs) undertake marketing and distribution functions for the limited purpose of supply of bio-diesel to consumers.

The cabinet also decided to relax the investment and production conditions prescribed by the ministry of petroleum and natural gas and add a new clause, to give marketing rights for bio-diesel (B100) to private biodiesel manufacturers, their authorised dealers and JVs of OMCs authorised by the ministry for direct sales to consumers.

The cabinet also decided to suitably amend certain clauses (Para 5.11 and 5.12) of the national policy on bio-fuels for facilitating consumers of diesel in procuring bio-diesel directly from private bio-diesel manufacturers, their authorised dealers and JVs of OMCs.

The decision is expected to encourage the production and use of bio-diesel in the country, a cabinet note said.

The petroleum ministry had announced  a bio-diesel purchase policy, effective from 1 January 2006, to encourage production of bio-diesel in the country for blending it with diesel with the objective of increasing energy security and meeting other emission and environment objectives.

Under this Policy, OMCs are required to buy bio-diesel (B100), meeting the fuel quality standard prescribed by the Bureau of Indian Standards (BIS), at a uniform price, as decided by the OMCs from time to time, for blending with HSD to the extent of five per cent, at identified purchase centres across the country.

State-controlled OMCs have been actively pursuing the bio-diesel programme and had entered into MoUs and formed JVs for cultivation of bio-fuels species on revenue wasteland and degraded lands in the country. These JVs have been formed with the objective of increasing production and marketing of bio-diesel in the country. They have sought permission to undertake activities like sourcing, trading, supplying, distributing and marketing of bio-diesel to consumers.

As the price of diesel is already deregulated and determined by the market, there is no economic justification in preventing private biodiesel manufacturers, their authorised dealers and JVs of OMCs authorised by the ministry from selling biodiesel directly to consumers, subject to their product meeting prescribed BIS standards, the cabinet note added.