The Hindu Business Line : Rlys invites bids to set up 4 bio-diesel plants

New Delhi, Oct 17 Indian Railways has invited bids from companies to set up and maintain four bio-diesel esterification plants for 20 years. The proposed locations for esterification plants — which will extract bio-diesel from raw jatropha oil — are Tughlakabad, Raipur, Itarsi and Erode.

Companies can bid for setting up all or selective plants. They are required to source the raw material (oil-seeds or raw oil) and ensure supply of 50 kilolitre bio-diesel per day.

However, in case there is shortage of raw material supply, firms can start with a 10 kilolitre per day capacity and step up the capacity later. Railways will provide the land for setting up the factories near its mainline diesel loco-sheds.

After 20 years, the company has to hand over the plant back to Railways. Railways estimates that each plant will be set up with an approximate cost of Rs 19.62 crore, with an operating cost of Rs 60 crore per annum. The move is a part of energy management strategy of Railways, which is the country’s largest diesel consumer at an annual requirement of about 2.27 million kilolitres. Railways, which uses a mix of diesel and electric traction, moves about half of its passenger traffic and 38 per cent of freight traffic using diesel.

This year Railways witnessed a significant reduction in the extent of discount it received from oil marketing firms. It currently receives a discount of Rs 150 a kilolitre of high speed diesel (HSD) from oil marketing firms, over and above the rate at which the oil companies dispatch HSD to their retail outlets. This is much lower than the Rs 1,125.27 a kilolitre discount that Railways enjoyed in 2007 and 2006.

Earlier this year, Indian Railways had finalised a tender to procure about 44,000 kilo-litres of bio-diesel at Rs 31.34 a litre. The bio-diesel to be procured is an imported crude palm-oil derivative, the technology for which is patented by a publicly-listed Malaysian firm Carotech Bhd. Carotech Bhd has formed a 50:50 joint venture with an Indian firm, Khard Soaps Pvt Ltd, called Khard-Carotech, which is expected to supply bulk of the Railways’ requirement (about 44,000 kilolitres). Initially, Railways plans to use bio-diesel at 10 per cent blending levels in all its 38 mainline locomotive sheds on a pilot basis.

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