As Narendra Modi govt looks to cut fuel import bill, HPCL set to build 3 more ethanol bio-refineries

After laying the foundation stone for the second generation ethanol blending bio-refinery in Bhatinda, Punjab, in December, state-run Hindustan Petroleum Corp (HPCL) now plans to start work on three other such refineries in the next three months.

"We are doing a detailed feasibility study as we need to have a supply chain for biomass," said MK Surana, chairman and managing director, HPCL.

The other three refineries will be set up in Uttar Pradesh, Bihar and Andhra Pradesh by the company, added Surana.

The National Democratic Alliance government is pursuing the ethanol blending programme wherein it has allowed 10% of ethanol being blended with petrol which will help in reducing the overall fuel import bill of the country. As per the Petroleum Planning and Analysis Cell under the ministry of petroleum and natural gas, the country imported 202.85 million tonne of crude oil in financial year 2015-16 at a cost of Rs 4.16 lakh crore.

The government has fixed a price of Rs 39 per litre of ethanol for the current financial year. However, the oil marketing companies (OMCs) have been struggling to achieve a target of 5% ethanol blending in the current financial year.

In total 12 such refineries, three-four will be set up each by HPCL, Bharat Petroleum Corp and Indian Oil Corp.

"The soft part such as technology selection and identifying supply chain is in progress for these bio-refineries. In case of Bhatinda, we have gone a step further and identified land," said Surana, adding the bio-refineries will take about three years for mechanical completion after environmental clearance to become operational.

According to Kalpana Jain, partner at consultancy firm Deloitte India, supply is the biggest challenge that bio refineries face. "These units require consistent and constant supply of feedstock to remain operational," said Jain.

The Bhatinda plant is expected to produce 3.2 crore litres of ethanol per year which will be sufficient to meet 26% of Punjab's requirement. The other states which have been identified to have ethanol refineries include Haryana, Madhya Pradesh, Assam, Odisha, Gujarat, Maharashtra and Karnataka at a combined estimated cost of Rs 10,000 crore.

Jain, however, cautioned that pricing of ethanol should be kept in mind and it should be ensured that it is not diverted to other use apart from petrol blending.

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