How soon can the government do enough for biofuels?

Biofuels have caught the attention of many entrepreneurs. Few have taken the plunge, enticed by the large tracts of oil-bearing plants like Jatropha and Ponghamia. However, the scores of entrepreneurs are facing many roadblocks.

It has been more than a year now since Naturol Bioenergy started pursuing a biodiesel project. Inspired from similar projects in Brazil, complete with a plan to bring about 120,000 acres of dry wasteland under energy crop cultivation in Andhra Pradesh, the company went ahead and announced its Rs 135 crore integrated biodiesel plant this June.

However, this joint venture of Naturol with Energea Gmbh, Austria and Fe Clean Energy Group Inc., USA is far from taking concrete shape, admits Bhaskar Chalasani, CEO and MD of the company. To be located in Kakinada the timeline of the project is difficult to predict. Construction will take about 15 months and closure of finances is in limbo as the investors play wait and watch to the government policy.

Same is the case with just about every entrepreneur currently sizing up the biodiesel opportunity. "We are looking forward to the government stand on incubating the biodiesel industry," said Satish Kumar, MD , Southern Online Biotechnologies Ltd. It has been over two years since the company has been trying to diversify into biodiesel manufacturing and 2007 is when Kumar foresees some real action on the scene.

That an ISP provider like Southern Online saw potential in the biodiesel industry enough to stick around even when the progress is snail-paced speaks volumes about the promise of the opportunity and the attendant sustainable development. There are many like him waiting to seize the opportunity.

Some are even taking the captive cultivation route. But Kumar finds it impractical to even try and exercise control over the raw material. "It should be left open and treated like any other commodity and it will find a balance. The point is to educate the farmers that this has economic potential," he said. The viewpoint is contended by Chalasani, who believes raw material availability on a commercial scale is what the industry would revolve around. "It is important to have some government assurance as a guarantee against the fluctuating prices in the commodity market," he elaborated.

The dynamics of the issue are complex as the government grapples with preparing a workable package for the farmers, said MG Gopal, the secretary for Rain Shadow Area Development, Government of Andhra Pradesh. "In a couple of months there will be clarity on the policy as well," he added citing inability to commit to a timeline.

Tying the industry with the welfare of the farmers is adding to the complexity but is central to the industry. The biggest announced project so far by Naturol, is said to have a potential to create 12,000 jobs in the agri sector in AP. This value proposition is the driving force but the progress is too slow to be in tune with the strides in biodiesel use around the world.

When an industry has a potential to create employment and benefit especially the marginalized farmers, which is a high priority on the agenda of the present government at the center the expectations from the government are also high. The question is how soon can the government do enough to boost the industry?

Nandita Singh, CyberMedia News
nanditas@cmil.com

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