The Ministry of Petroleum & Natural Gas

The Ministry of Petroleum & Natural Gas is committed to taking forward the.National Common Minimum Programme (NCMP) of the Government of India, stretching across the various focus areas identified therein, while ensuring the basic principle for governaige of economic reforms with a human face. The Ministry is inter alia committed to meeting the social objectives of NCMP and enhancing energy security. One of the critical elements for achieving the objective of energy security is the development of alternative sources of energy including bio-fuels. The Ministry of Petroleum and Natural Gas is already implementing a five per cent ethanol-blended petrol programme, which is designed to support the agriculture and the rural sector, There is now an increased awareness about bio-diesel, a diesel fuel substitute , which . can be made from virgin or used vegetable oils and animal fats.

Bio-diesel is an environment friendly fuel, which has almost no sulphur, no aromatics, and has about 10% built-in oxygen. Bio-diesel needs no separate infrastructure for storage and dispensing and the existing tankage and dispensing stations of conventional diesel can be used. Bio-diesel is safe to handle and the flash points of bio-diesel are higher than conventional diesel. Blending of bio-diesel with diesel would result in the reduction of un-burnt hydrocarbons, Carbon Monoxide and particulate matter in auto emissions, and will be in line with the objectives of the Auto Fuel Policy of the Government.

Bio-diesel can be made from any feedstock oil or fat, and the cost of the feedstock is the most important constituent in the economics of bio-diesel production. Independent Research and Development (R&D) efforts are being undertaken in R&D and academic institutions and in the oil companies on bio-diesel, both for establishing the properties of different feed-stock based bio-diesel production, and for the use of different blends of bio-diesel in diesel in the transportation sector.

In the USA and the European Union, where bio-diesel is commercially being made from edible oil like soybean or rapeseed oil, the cost of production is one and a half times to twice the cost of producing diesel. India however is deficient in edible oils. In selecting possible feedstock for the indigenous production of bio-diesel, care should therefore be taken that only non-edible oil is used for the purpose.

In the above background, the groundwork for launching a proposed National Mission on bio-diesel, (which is based on a Report of the Planning Commission) is in progress with the Ministry of Rural Development as the nodal Ministry. The Mission, if approved, would inter-alia involve:

large scale plantations of Jatropha Curcas,
Selling up of expeller units for extracting oil from Jatropha seeds,
Setting up of bio-diesel plants for making bio-diesel from Jatropha oil, and
Blending of bio-diesel in diesel, and marketing of such blended fuel.
The Ministry of Petroleum and Natural Gas is committed to lend support to the proposed Mission activities for blending of bio-diesel in diesel and marketing of such blended fuel.

Government of India
Bio-diesel Purchase Policy

It is imperative (hat the bio-diesel offered for blending in diesel is of standard quality. Therefore it would be necessary that only those bio-diesel manufacturers who get their samples approved and certified by the oil companies and get registered as authorised suppliers would be eligible for assured purchase of the product. Also, the bio-diesel purchase centers should be equipped with minimum testing facilities for ensuring purchase of bio-diesel of requisite specification. Subject to the above requirement, in recognition of the synergy and spin-off effect that announcing a Government of India – Bio- Diesel Purchase Policy will have on the rural economy, the Ministry of Petroleum and Natural Gas hereby resolves to introduce a Government of India – Bio- Diesel Purchase Policy as follows:

(I) With effect from 1.1.2006, the public sector oil marketing companies shall purchase, through its select purchase centers, bio-diesel (B100), which meet the fuel. Quality standard prescribed in the Bureau of Industrial Standards (BIS) specification formulated vide PCD3 (2242)C-dated 26.7.2004, and as may be notified and modified from time to time the oil marketing companies shall make available the comprehensive industry guideline “Operations. Quality and Safety Manual on Bio-diesel- HSD B100 and HSD B05max” for information and Guidance of the bio-diesel industry.

(II) The purchase centers have been identified in consultation with the oil marketing companies, via the Indian Oil Corporation (IOC). Hindustan Petroleum corporation (HPC) arid Bharat Petroleum Corporation (BPC), on the basis of availability of minimum testing facilities for B100 and for blending in HSD to the extent of five per cent Depending on response, felt need, and preparedness in testing-and accepting bio-diesel, more purchase centers would be identified subsequently.

The purchase centres shall be in the following locations:

State Location
Andhra Pradesh Ghatkesar (HPC) ( also for Jharkhand and Orissa States)
Chattisgarh Mandirhasaud (HPC)
Delhi Bijwasan (IOC)
Gujarat Kandla (BPC)
Haryana Rewari (IOC)*
Karnataka Devanagunthi (Bangalore) (IOC) Mangalore (IOC)
Madhya Pradesh Mangliagaon – Indore ( IOC)
Maharashtra Manmad (BPC)
Borkhedi – Nagpur (BPC)
Loni (HPC)
Vashi (HPC)*
Punjab Bhatinda (!OC)
Rajasthan Sanganier-Jaipur (BPC)
Salawas (HPC)
Tamilnadu Korrukupet Chennai (IOC)
Narimanam ( IBP)
Karur (BPC)*
Uttar Pradesh Panki (IOC) (a/so for Utlaranchal State)
Amousi- Lucknow (IBP)*

* To be upgraded for carrying out full specification tests for BIS standard.

(III) Bio-diesel manufacturers interested in supplying bio-diesel to public sector oil marketing companies should approach the state level co-ordinator (SLC) pertaining to the state, and after assessment of production capacity and credibility of the prospective supplier by joint evaluation / certification by the industry team, samples would be tested and if these meet the prescribed BIS specifications, the supplier shall be registered as an authorized supplier.

(IV) In normal course, the registration shall be re-validated after a year. However if either the feedstock used or the process of manufacturing bio-diesel is altered, re-validation of registration shall be necessary immediately.

(V) In registering authorised suppliers of bio-diesel priority shall be given to such bio-diesel producers who propose to use non-edible tree borne oils as feed stock for producing bio-diesel, and have undertaken or have committed themselves to support farming of oil bearing plants with a view to using only tree-borne non-edible oil for manufacture of bio-diesel in future.

(VI) The oil marketing companies shall buy bio-diesel (B100) which meets the prescribed BIS standard, at a uniform price, as may be decided by the oil marketing companies from time to time, depending on market conditions. Such a uniform price shall be inclusive of any taxes and duties and transportation cost for delivery of bio-diesel at the purchase centre. The uniform price once fixed shall be in operation for six months, at the end of which it would be reviewed.

The initial purchase price of bio-diesel by the oil marketing companies will be Rs 25 per liter. The registered authorised bio-diesel manufacturers shall be required to deliver B100 at the notified purchase centers in calibrated tank trucks of capacity not less than 10 K.L. In case the suppliers envisage any deviation, they should Inform the concerned oil company and supply as per mutual convenience.

(VII) The supplier should give schedule of supplies that can be made during the ensuing month to SLC of the state by 15th of the previous month.

(VIII) All expenses related to testing of the bio-diesel for acceptance of the consignment shall be borne by the oil marketing companies. Every consignment shall be tested for the following specifications:

Density@15 degree C,
Kinematics Viscosity@40 degree C
Flash Point
Water Content
Copper corrosion, and
Acid value

(IX) In accordance with the provisions of Article 243G of the Constitution, read with Article 243 ZD, Panchayati Raj Institutions may, in consultation with the National Oilseeds and Vegetable Oils Development Board, the Ministry of Bio-technology and the National Botanical Research Institute, who are working on a net-work programme for making available good quality seed and tissue culture for oil bearing trees including Jatropha, prepare and consolidate plans for the cultivation of oil bearing trees. Such Panchayati Raj Institutions may also consolidate plans for collection of seeds and transporting them to oil extraction units, and pose such plans at village, intermediate, and district level to entrepreneurs in the private sector who, either on their own or through joint ventures including such joint ventures with the Panchayati Raj Institutions themselves would undertake production of bio-diesel as Rural Business Hub (RBH) activity.

(X) The Petroleum Conservation and Research Association (PCRA), in association with the Ministry of Panchayati Raj and State Governments will conduct mass awareness programmes on plantation of Jatropha etc, collection of seeds and extraction of oil for the production of bio-diesel. Such awareness programmes shall be conducted through and in association with Panchayati Raj Institutions at appropriate levels through such means as workshops, seminars, kisan melas, and electronic and print media in local languages.

(XI) R&D studies and field trials shall continue to be conducted for developing data on increasing bio-diesel content in a systematic manner and be coordinated by the Research and Development Division of Indian Oil Corporation Limited, with the aim of achieving maximum blending of bio-diesel up to 20% in diesel. For this purpose, experience of other countries would be studied both at the commercial level and through diplomatic channels, under various bilateral and multi-lateral initiatives as well as Government understandings/agreements.

(XII) Progress of the implementation of the bio-diesel purchase policy by the oil marketing companies will be monitored by the Petroleum Policy and Analysis Cell {PPAC} and PPAC will report the progress to the Ministry of Petroleum and Natural Gas on a regular basis.

Ministry of Petroleum and Natural Gas
Government of India
Dated the 9th October, 2005