KASARAGOD: Dubai-headquartered Neutral Fuels, a clean energy company, and Qatar-based Erigo Bio Fuels have joined hands to set up a biodiesel plant in Kasaragod, the first in Kerala.
The two companies have a similar joint venture in Oman. Karl W Feilder, founder and CEO of Neutral Fuels, and Erigo Bio Fuel's managing director Haksar C H met collector Bhandari Swagat Ranveerchand and briefed her about the business model.
The plant will convert used and waste cooking oil into biodiesel, and will have a capacity to produce 500 tonnes of biodiesel every month, which comes to around 5.30 lakh litres, said Haksar, a native of Kozhikode. The biodiesel plant is being set up on a two-acre plot at the state government's industrial development area at Ananthapuram near Kumbla. The unit will be operational by December. It will give direct employment to around 80 to 100 persons in the first two years, apart from Kudumbashree and Haritha Karma Sena workers, who would be tapped to collect waste cooking oil from houses, restaurants, hotels, and bakeries.
The company is planning to collect waste cooking oil from across Kerala, and also from Tamil Nadu. Qatar, with a population of 35 lakh people, produces 500 tonnes of biodiesel every month, said Haksar. Kerala with a 10 times more population (3.5 crores) can produce at least 5,000 tonnes of biodiesel every month.
Challenges in Kerala Neutral Fuels produces biodiesel in the UAE, Bahrain, Oman, Singapore, South Africa, and India. Erigo has operations in Qatar, Oman, Tunisia. On the face of it, Kerala -- with a culture of oily food and deep-fried snacks -- should be ideal for a biodiesel plant. Haksar said the biodiesel produced from waste cooking oil meets the specifications of diesel from fossil fuel and can be directly used in diesel vehicles.
Biodiesel will be 20% to 25% cheaper than fossil fuel. Yet, today the business of biodiesel does not look viable in Kerala. In Kerala, hotels, restaurants, bakeries, and snacks-making units sell their waste cooking oil to unauthorised agents at a premium price of Rs 60 to Rs 70, said Haksar, who studied the market. These agents process the waste oil, repackage it and either put it back in the food chain or sell it as lamp oil or supply it to soap-making units, he said. All three are illegal and unethical but highly profitable, he said. "Lamp oils are sold for Rs 180 per litre," he said.
The reprocessed waste oil can cause cancer if it is used in the kitchen. If used in soaps, it can cause skin disease. And since the waste oil was used to fry all types of food, it is not ethical to use it as lamp oil," he said.
So, legally, waste cooking oils can be sold only to biodiesel companies, Haksar said. Biodiesel companies cannot offer Rs 60 for waste cooking oil because the oil marketing companies such as Indian Oil Corporation pay only Rs 55 to Rs 60 for biodiesel. Haksar said the challenge can be addressed if the government renewed the annual licence of restaurants, hotels, and food companies only if they had an agreement with any authorised biodiesel factories to sell their waste cooking oil.