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ECONOMY-INDIA: Spiralling Oil Prices Compel New Look at Bio-fuels

Ranjit Devraj

NEW DELHI, Oct 22 2004 (IPS) - Spiralling petroleum prices are compelling India, a major importer of crude oil, to dust out plans for alternate fuels especially in the transport sector.

Officials estimate that India’s oil import bill could rise by 50 per cent to 27 billion U.S. dollars during the current fiscal as against 18 billion dollars in fiscal 2003-04, on account of higher international prices now hovering around 55 dollars a barrel.

”We estimate crude oil imports to rise to 100 million tonnes next year,” said M.S. Ramachandran, chairman of the Indian Oil Corporation (IOC), the state-owned importer and refiner at a press conference recently.

The communist-backed, Congress-party government, that was elected to power in May has already resorted to massive duty cuts as part of populist efforts to shield consumers from the price rise but observers say it may not be able to hold out much longer if present trends continue beyond January.

It is also committed to improve the lot of 600 million farmers that form 60 percent of the country’s billion plus population who live on more or less than a dollar a day.

Meanwhile, both government and non-government organisations are urging consumers to take a second look at locally available alternatives especially bio-fuels which have the added advantages of being cleaner and provide revenue to the country’s large farming community.

India has also started to supply petrol blended with ethanol distilled from sugar cane that is grown extensively across the country – taking the cue from Brazil, where this alternative fuel has proven to be a success among the people.

The Indian government, however, is more keen to use this fuel as a substitute for diesel – 50 billion litres of which India guzzles annually.

The quest for alternative fuels has also prompted many to look at the jatropha plant which, apparently, yields a diesel substitute.

Jatropha has the patronage of Bhairon Singh Shekhawat, India’s vice president who believes that large-scale cultivation of the plant could provide employment to millions of people in rural India.

”We can no longer overlook the potential of jatropha,” said Shekhawat at a recent conference on alternate fuels.

Last year, India’s state-run railway system, a major consumer of diesel, set aside 500 hectares of land for jatropha cultivation after trial runs using the ‘bio-diesel’ on its traction engines proved successful.

Separately India’s prestigious Council of Scientific and Industrial Research (CSIR) has, in collaboration with the University of Hohenheim in Germany, been busy developing, since last August, a bio-diesel blend that could be used for road vehicles.

The director-general of the CSIR, R. A. Mashelkar said he was encouraged by test runs of its jatropha-based bio-fuel blend on imported, Mercedes Benz C-class cars which successfully ran 5,000 kilometres across different climatic zones and under gruelling road conditions.

”The road tests have been truly encouraging and has generated tremendous enthusiasm among the public and opinion-makers,” he said.

Mashelkar said he has begun talking to Tata Motors, the country’s biggest manufacturer of diesel engines and vehicles and a world major, to begin commercial trials of the bio-diesel.

A direct result of the highly-publicised CSIR experiments has been a rush by entrepreneurs to set up bio-diesel units and jatropha plantations, especially in southern Andhra Pradesh, one of India’s most forward looking states.

A leader in Andhra Pradesh is Southern Online Technologies which is setting up a four million dollar plant and expects to begin production by April next year.

”We have already entered into contracts with several farmers to buy seeds at around four cents a kilogram and our only fear, is that we run out of raw material in the initial stages,” Satish Kumar, the director of the company, told IPS.

But Kumar who has orders from the state-owned railway agencies and truck fleet owners has already made provisions to make use of alternate oil from animal and vegetable sources until farmers in Andhra Pradesh catch up with the new demand.

Although well-known names like Mercedes Benz are now backing jatropha, the best endorsement for its environment-friendly and cheap oil comes from tribals in India’s remote Bastar district in central Madhya Pradesh.

”Tribals have been using jatropha oil to power their pumps and other farm equipment for years and now they are looking at commercial possibilities,” said Satish Lele, a social worker who has been working with the voluntary agency Vanvasi Kalyan Kendra (Tribal Development Centre) to propagate jatropha cultivation as means of empowering tribals in India’s neglected hinterland.

”What we find most encouraging is that jatropha is easy to grow, drought resistant and promises to bring in more money for the tribals as prices of imported petroleum go up – it is a win-win situation,” Lele told IPS.

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