PRICE FIXING FOR JATROPHA OIL
AND THE IMPENDING CONFUSION
The Government of India has moved a step forward in implementing its bio fuel plans, by asking the public sector oil companies to buy jatropha oil from the producers at the price of Rs.25/- per litre. While this is a significant decision, there has been no comment or observations from the Government with regard to several other aspects of bio fuel industry which call for urgent attention.
For mixing with diesel, the raw jatropha vegetable oil has to be transesterified. The process of transesterification involves the production of glycerine as co product , at the rate of 250 kgs of glycerine for every 1000 kg. of transesterified oil produced. The Indian demand for glycerine at present is only around 50,000 tonnes per annum and large production of transesterified oil would lead to substantial surplus production of glycerine in the country. There is no way to sell the surplus quantity of glycerine which is already produced in adequate quantity in the country.
In view of the huge capacity creation for bio diesel in Europe and North America in recent times, glycerine has already become a disposal problem in the world.
There is urgent need to put forth national efforts to develop new applications for glycerine. The government is silent on this issue and one hopes that it is aware of this problem. It is possible to develop applications for glycerine for production of certain products which are now made by petroleum based routes. But, unless appropriate technology development efforts would be urgently initiated, a solution cannot be found for this problem. A dynamic government initiative to work on glycerine based research is vitally necessary to take the biodiesel programme forward.
The government has also not explained the basis for fixing the price of Rs.25/- per litre. Jatropha oil is produced from jatropha seeds and the farmers need to get atleast Rs.4/- per kilogramme of jatropha seed to make the agriculture economics for cultivation of jatropha worthwhile. It would be possible to produce transesterified oil at cost below Rs.25/- per litre only if the price of the seed would be less than Rs.2/- per kilogramme. At this price, jatropha cultivation would be a losing proposition for the farmers.
The cake produced after extracting oil from jatropha seed cannot be used as cattle feed , as in other parts of the world where the vegetable oil for bio diesel production are produced from edible crops such as rape seed and soya. Jatropha is a non edible crop and the seeds are toxic. The sale realization for the cake is very important for optimizing the cost of production of jatropha oil. As of now, there is no plan for use of the jatropha seed cake arising after oil extraction. The one possible solution is to use the cake as biomass for production of power. But, no worthwhile pilot plant studies have so far been made to assess the process parameters and the economics of operations for the bio mass unit.
The economic and viable capacity for the trans esterification plant for producing trans esterified oil from jatropha vegetable oil is 30,000 tonnes per annum which would call for investment of several crores of rupees. The trans esterification project is a medium or large scale industry and is not a small scale operation.
While a number of trans esterification plants of large size of one million tonnes per annum is in operation abroad, none of them are based on jatropha oil but on other crops such as soya or rape seed etc. Therefore, it has to be seen that there is no commercial experience so far anywhere in the world in operating large scale trans esterification plants based on jatropha.
When the government has announced the price of oil, where is the source for supplying it to the government immediately, when large scale trans esterification plants are yet to be built in the country?.
The net result of this situation could be huge import of trans esterified oil from overseas countries to India in the coming years, which would leave the Indian jatropha industry helpless and stunned. .
Government has to ensure that the native industries are supported and protected and Indian farmers are benefited when it implements its bio diesel policy.
This may call for some special incentive schemes and subsidy programmes and so far there is no indication that the government has applied its mind towards such requirements.
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News and Views 
November 2005
