Govts subsidy-based biofuel programme set to take shape

Written by ASHOK B SHARMA | New Delhi, Jul 6 | Updated: Jul 8 2008, 01:26am hrs
The government's proposed massive subsidy-backed bio-fuel programme is soon likely to be a reality, as the empowered group of ministers (EGoM) headed by the Union agriculture minister, Sharad Pawar is slated to finalise it on July 9.

The EGoM will discuss the draft National Bio-fuel Policy prepared by the Union ministry of new and renewable energy sources. It will also resolve the long-pending tussle between the two Union ministries - the ministry of rural development and the ministry of new and renewable energy sources - over the budgetary allocations for their programmes.

The new and renewable energy ministry has suggested the setting up of a National Bio-fuel Development Board (NBDB), which would determine the minimum support prices (MSPs) for bio-fuel feedstocks like jatropha, karanja seeds, and other oil-bearing materials. It also suggested that the government render financial support to oil processors for a period of five years.

Comparatively, the rural development ministry has demanded a gross budgetary support of Rs 1,340 crore for five years to set up a National Mission on Bio-Diesel and the launch of its first demonstration phase of jatropha cultivation in 4,00,000 hectare.

The EGoM, set up in the middle of the previous year under the chairmanship of Pawar, consists of the minister of state for the ministry of new and renewable energy, rural development minister, Raghuvansh Prasad Singh, petroleum minister, Murli Deora, members of the planning commission, and other cabinet ministers from relevant economic ministries.

The pace of deliberation by the EGoM had been slow as the world was gripped with the food crisis on account of the bio-fuel programmes in Europe and North America. International agencies like UNCTAD, UNESCAP, OECD, and the World Bank blamed the bio-fuel programme for the use of food crops for fuel and displacement of food crops by bio-fuel crops.

However, the government is determined to launch its bio-fuel programme with an assurance that it would be a sole part of the countrys energy needs without contributing to the food crisis. Mandatory 10% doping of petrol with ethanol has been proposed to be implemented from October this year.

The Bio-Diesel Association of India (BDAI) has demanded that bio-diesel be categorised as "declared goods" with uniform rate of taxation across the country, exemption from Value-Added Tax (VAT) and sales tax on bio-diesel component used in blending, income tax exemption under section 80-1B, 30% subsidy for input cost should be given to farmers for growing bio-fuel crops and for corporates undertaking bio-fuel crop production the subsidy should be extended without upper limit . The automobile manufacturers should be encouraged to give warrenty for facilitating higher blends of bio-diesel beyond 5%.