Nova Oleochem to Set Up $56 Million Biodiesel Plant in Gujarat

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Researched by Industrial Info Resources (Sugar Land, Texas)--India's Nova Oleochem (Mumbai, India) is planning to set up a biodiesel plant and three captive power plants in Gujarat. The plant will be designed to produce 110,000 liters of biodiesel per day and each of the power plants will have a generating capacity of 2.5 MW. The feedstock for the plant will be Jatropha curcus, and the power plants will use agricultural waste as feedstock.

Jatropha plantations will be spread over 10,000 hectares of wasteland, and Nova Oleochem has already obtained approval in principle from the state government. Plans are on to extend the plantation area to the states of Karnataka and Rajasthan. Land acquisition is expected to be complete within the next three to four months, and the cultivation should begin by the end of March 2009. Power generation is scheduled to begin a year after the land is acquired, and the plant should be ready to begin operations after three years.

The company plans to invest over $56 million in the project. About 55% of the funds will be sourced from internal sources, and the remaining amount will be obtained from private investors. Currently, the company is in discussions with various banks in order to fund the plantation project. Nova Oleochem expects to earn about $12.5 million through carbon credits in the second year.

Ethanol biofuel has been used as a fuel additive in India since 2001. A 5% ethanol-gasoline blend is mandatory in certain states. Molasses or bagasse, a byproduct of sugar manufacturing, is used in India to produce ethanol.

The National Biodiesel Mission formulated by the government aimed at meeting 20% of India's diesel requirement by 2011--12. However, the mission was shelved earlier this month, as the government feared loss of agricultural land to the Jatropha plantations started by the large energy players. Several companies have already begun Jatropha plantations on 300,000 hectares of wasteland across the nation.

The state-run Indian Oil Corporation Limited (BOM:530965) (New Delhi) is already developing more than 30,000 hectares of wasteland for Jatropha plantations in the state of Chhattisgarh and proposes to develop another 30,000 hectares in Madhya Pradesh. In Chhattisgarh, Indian Oil is working with the Chhattisgarh Renewable Energy Development Agency on a biofuel project.

D1-BP Fuel Crops (London), a joint venture between BP plc (NYSE: BP) (London) and D1 Oils plc (LON:DOO) (Middlesbrough, U.K.), has identified 1 million hectares of land available globally for the cultivation of Jatropha, 30% of which is in India.

India's Reliance Biofuels Private Limited (Mumbai, India) has successfully developed high-yielding hybrids of Jatropha and has commissioned a pilot biodiesel plant with a capacity of 6,500 tons per year and developed second-generation processes for producing bioethanol and biobutanol.

Jatropha is the most favored source of biodiesel in India as it is a non-edible crop that can grow on infertile soil. The plant is drought resistant and perennial. Jatropha can survive high temperatures and has a higher oil yield than soy or rapeseed.

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