Title: Role of various stakeholders in promotion of Biodiesel in India
1- Role of various stakeholders in promotion of
Bio-diesel in India - Presentation by
- Parveen Mithra
- Vice President Advisory Services
- SREI Capital Markets Limited
2Government of India
Evaluate Bio-diesel Sector Proposals and Policy
issues in light of following merits
- Contributes to the energy security of the
country. - Restricts imports of crude and/or HSD.
- Checks further land degradation and restore
degraded lands, make them more productive and
contribute to greening of the country. - Contributes to poverty reduction and generate
rural employment and income mainly for the poor,
particularly in areas where under-employment is
more pronounced and agriculture is relatively
less developed. - Contributes to the industrial development of the
country. - Checks pollution of air caused by emission from
transport vehicles using HSD and achieve
prescribed emission standards. - Mitigates effects of climate change due to green
house gases and to contribute to achievement of
the objectives of the United Nations Framework
Convention on Climate Change (UNFCCC)
3Planning Commission
- Energy Policy Committee to put emphasis on
Bio-diesel promotion and draw up long term goals
and action plan to achieve those goals. - Set up realistic achievable Bio-diesel targets
for 11th Plan i.e. bringing around 2.5 million
hectare area under Jatropha plantations by the
end of Plan so as to achieve 5 blending of
bio-diesel with petro-diesel - Allocate sufficient Central Plan Funds for
development of the sector - Encourage State Governments to promote this
sector through their various schemes under State
Plans
4Ministry of Rural Development
- Nodal Ministry for implementation of National
Mission on Bio-diesel - Expedite obtaining EFC/CCEA approvals for the
Mission - Take up setting up of National Bio-diesel Board
or creation of a dedicated department/cell with
adequate staff for Bio-diesel programme. - Identification and selection of wastelands
through Department of Land Resources - Integration of Bio-diesel Mission with other
rural upliftment schemes i.e. National Rural
Employment Guarantee Scheme, Rural Infrastructure
Development Fund of NABARD etc. - Facilitating timely and smooth flow of Plan funds
to different stakeholders - Overall Monitoring Supervision of entire
Bio-diesel program
5Ministry of Environment Forests
- Identification of wastelands / degraded lands for
regeneration of forests - Nursery Raising of Jatropha other Tree Borne
Oilseeds - Undertaking plantation of Jatropha other
bio-fuel crops over identified forest wastelands - Facilitating Clean Development Mechanism (CDM)
Benefits for emission reductions achieved through
Bio-diesel projects - Research Development through ICFRE
6Ministry of Agriculture
- Nursery raising of Jatropha through NOVOD Board
agencies under its network - Undertaking plantations over non-forest lands by
involving various Agriculture Universities NGOs - Buy-back guarantee to farmers for purchase of
seeds at MSP - Training Extension Programmes for education and
awareness in villages - Research Development through ICAR, IARI etc.
for multiplication through tissue culture, better
seed and oil yields, control over pests
diseases, detoxification of oil cake etc.
7Ministry of Panchayati Raj
- Identification of wastelands for which ownership
is of Panchayats - Encouraging Panchayats /farmers/entrepreneurs to
enter into MOU so as to take up Jatropha farming
through Contract Farming model with buy-back
guarantee
8Ministry of Petroleum Natural Gas
- Regular Review and modifications (as and when
required) of Bio-diesel Purchase Policy.
Bio-diesel purchase price should match with
Ex-depot price of diesel. - Gazette Notification on mandatory blending of
bio-diesel with diesel after availability
position of bio-diesel improves in India - Take up issue of Excise Duty concessions on
Bio-diesel with Ministry of Finance - Take up issue of Customs duty concessions on
import of plant machinery and alternate
feedstocks (i.e. palm oil etc.) till the time
local availability of these items is as per
satisfaction of entrepreneurs - Mass Awareness programmes through network of Oil
Companies and Petroleum Conservation Research
Association
9Ministry of Non-Conventional Energy Sources
- Draft National Policy on Bio-fuels with special
focus on Bio-diesel - Promote Bio-diesel sector through soft loans by
IREDA - Sponsor RD for development of alternate devices
and applications of Bio-diesel
10Ministry of Railways
- Form JVs with entrepreneurs to undertake
plantation of Jatropha over wastelands along
Railway Tracks - Purchase Agreements with oil companies to supply
bio-diesel blended fuels - Trials on Bio-diesel blended fuels in Railway
Engines
11Ministry of Road Transport Highways
- Form JVs with entrepreneurs to undertake
plantation of Jatropha over wastelands along
National Highways - Purchase Agreements by State Transport
Undertakings with oil companies to supply
bio-diesel blended fuels - Trials on Bio-diesel blended fuels in STUs buses
- Involving Society of Indian Automobile
Manufacturers (SIAM) for issues such as Vehicle
Manufacturer Guarantees, Engine Modifications,
Emission Norms etc.
12Ministry of Science Technology
- Undertake RD studies on all products and
by-products in bio-diesel link chain through
institutes and departments like DBT, IIP, IICT,
CSMCRI, NBRI, ITRC, IITs etc.
13Ministry of Finance
- Consider Excise Duty Concessions on Bio-diesel
- Consider Customs Duty concessions on import of
plant and machinery - Consider Customs Duty concessions on import of
alternate feedstocks till the time local
availability of Jatropha and other bio-fuel crops
is ensured - Ensure easy availability of credit at
concessional rates through Financial Institutions
14Ministry of Small Scale Industries Agro Rural
Industries
- Facilitate setting up of Seed Collection and Oil
Expelling Centres through schemes of KVIC
15State Governments
- Set up Bio-fuel Authority or designate nodal
department in the State for coordination work
w.r.t. bio-diesel related projects with Central
Government - Facilitate identification of Government, private,
public/community lands for raising of Jatropha
Other bio-fuel crops - Facilitating leasing of identified degraded lands
to entrepreneurs for undertaking raising of
Jatropha plantations/other bio-fuel crops on
Contract Farming model - The States which do not have such policy of
leasing of large area of land can distribute the
degraded land to the landless farmers _at_ 2 ha per
family and synergise it with National Rural
Employment Guarantee Scheme - Consider offering tax breaks, irrigation subsidy,
VAT concessions etc. to encourage entrepreneurs,
farmers etc. - Consider participation in certain projects with
Private Sector through Special Purpose Vehicle
(SPV) route - Integrating various State Plan Schemes on
development of rural sector with bio-diesel
projects
16Private Developers / Strategic Development
Partners
- Can undertake consultancy assignments and act as
a Strategic Group advising GOI on various
bio-diesel sector related policy issues - Can enter into agreement with GOI (i.e. nodal
Ministry) to form Special Purpose Vehicles
(SPVs) at Centre and pooling of resources is
possible to for professional management of
projects and generation of a big corpus of funds - SPVs involving private developers can be formed
in the States also for funding, implementation
and monitoring of projects and as a single
channel window at state for coordination with
Central Govt/all other stakeholders - Can assist GOI in attracting grants / low cost
funds from international funding agencies.
17Current Models Suggested Approach
18Plantation Oil Processing Current Models
19Cash Flow in the Value Chain
Cash Flow for Bio Diesel
Cash Flow For Oil cake
Cash Flow for Oilseeds
Cash Flow for Oil
Cash Flow for Glycerol
From Local consumption
Seed Collection Centre
FARM
Expeller Unit
Transesterification Unit
To Glycerol Wholesalers
Oil Depot
To User Industries (Pharma, Soap Making, Wax
Making etc)
To Final Customer
20Proposed Implementation Structure
GoI (Ministry of Rural Development or Agriculture)
Grants, Concession Agreements
Strategic Development Partner
Designated Agency of GoI
JV Agreement
Special Purpose Vehicle
Equity Contribution
Equity Contribution
Grants
State Level Project SPV 2
State Level Project SPV 3
State Level Project SPV 1
21Proposed Implementation Structure
National Level SPV
Rural Employment Guarantee Scheme
Private Developers
Grants, Concession Agreements
Subsidies / Grants
State Level Project SPV
Banks / FIIs
CER Agreement
Loan Agreement
CERs Trading Agency
Marketing (Buy-back arrangement with oil
companies and other potential customers)
Share Holding
Contract Farming
Panchayat / Forest Department / Farmers
Cooperatives (Raw Materials)
Logistical Support Provider (Storage and
Transportation)
Oil Expeller Unit Trans-esterification Unit
(Oil Extraction)
22 Role of Strategic Development Partner
- Appraise commercial viability and sustainability
of the project. - Assist in developing the IDENTIFIED PROJECTS on
Commercial format on its other internationally
known acronyms. - Consequently, assist development of the Projects
up to the stage of TECHNICAL AND FINANCIAL CLOSE.
- Professional Management through experienced and
qualified Managers. - The role would consist of
- Advisory services during the entire project
development cycles. - ESTABLISHING ELIGIBILITY for World Bank and
Multilateral Agencies/ Commercial
Banks/International funding / CDM Fund. - MERCHANT BANKING SERVICES for reaching financial
close - To render assistance up to COD (Commercial
Operation Date) - Advise the State level SPVs on problems and
issues requiring policy support from Centre.
23Role of Strategic Development Partner
- The Four Phase Advisory Services would consists
of - Phase I - Project Evaluation and Documentation
- Detailed Feasibility and Investment Banking
Report - Environmental and Social Assessment Report
- Risk Assessment and Management Plan
- Draft Contractual Documents
- Detailed process for implementation
- Phase II - Methodology of Implementation The
stakeholders by consultation would decide about
final organisation structure, which would
implement the Project. - Phase III - Selection of Private Developer
- Phase IV - Project Financial Close
24 Role of Government / Designated Agency
- Agency shall take necessary steps to facilitate
permissions/approvals required for the
Project(s). - Agency shall assist in collection of data,
co-ordination of activities, supervision and
shall assist in obtaining necessary approvals
from appropriate Government Departments and
render all assistance for the Project(s). - Agency shall assist in the creation of
appropriate legislation, if necessary to enable
proper buy-back arrangement. - Provide Grant on merits of each identified
projects. - Provide policy support for project through
legislative framework i.e. exemption of VAT on
Bio-diesel, irrigation subsidy for farmers etc. - Monitor social responsibilities of SPV towards
creation of employment opportunities for rural
people.
25Advantages of the Model
- Mobilization of large corpus of funds through
pooling of equity, loans, central grant and ODA
from abroad. - Policy/Legislative framework support assured
through equity participation of State Government.
- Faster administration of Central Grants
Subsidies to beneficiaries. - Access to Rural Infrastructure Development Funds
of NABARD through State Government. - Good potential to attract ODA and equity
participation from foreign funding institutions. - Better bargaining strength to negotiate long term
loans with Financial Institutions/Banks.
26Advantages of the Model
- Ensures availability of land since Panchayats /
Forest Departments / Farmers shall be stake
holder of the SPV. - Provides for organized collection of seeds and
raw oil thereby reducing losses and
transportation costs. - Can ensure consistent availability of bio-diesel
to oil companies. - Quality Inputs i.e. planting material,
fertilizers etc. can be arranged thereby
resulting in better seed/oil yields. - Technical know-how and guidelines.
- Centralized knowledge / data bank for the State.
27THANK YOU