Railway electrification company BCPL Railway Infrastructure has planned to diversify into production of bio-ethanol, a natural additive used in blending of petrol.
This diversification will be housed within a new subsidiary “BCL Bio Energy Pvt Ltd,” which has already been granted provisional stage-1 clearance by the Department of Industries, Government of Bihar. Clearance was granted for production of ethanol from grains like maize and rice.
“This is the first stage clearance and this enables the said subsidiary company to apply for other clearances as required under the Bihar Industrial Investment Promotion Rules 2016,” BCPL Railway Infrastructure said in a statement.
Plant details
The plant is likely to be located at Purnia in Bihar, or at any other suitable location, the company said. The proposed plant will have distillation capacity of 60 kilolitres per day of fuel-grade ethanol. Considering 350 operational days in a year, the annual production would be in the range of 21,000 kilolitres (or 21 million litres).
The proposed plant is likely to cost Rs.80 crore, while financing would be a debt-equity ratio of 5:2 (roughly 70 per cent debt and 30 per cent equity). Construction would start once land acquisition and statutory clearances are in place. By current thinking, the plant would start operations in 14 months from now, and would be reflected in the accounts from FY23 onwards. “The project once completed is expected to generate ROE of about 40 per cent for BCPL on its investment,” BCPL Railway Infrastructure said.
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Policy framework
The Government of India, through the Union ministry of petroleum & natural gas, is implementing the Ethanol Blended Petrol (EBP) Programme wherein oil marketing companies (OMCs) sell petrol blended with 10 per cent ethanol. The ethanol needs to be of 99.6 per cent purity.
In 2020, 6 per cent blending was achieved; this was lower than the targeted 10 per cent. The blending proportion is proposed to be increased to 20 per cent by 2030, it is learnt. This would substantially increase the demand for fuel-grade ethanol.
BCPL Railway Infrastructure said that the proposed diversification was being undertaken to avail the business opportunity presented.
(Featured photograph for illustration only)
