To set up plant for producing ethanol through new know-how
In what could be a significant step towards producing ethanol through an alternative other than sugarcane, Indian steel major Jindal Steel and Power ltd (JSPl) is in talks with New Zealand-based renewable energy company lanzatech for procuring a technology which would enable it to produce the fuel from unused blast furnace (BF) gas.
Upon acquiring the technology, JSPl plans to set up a plant for producing ethanol using the new process which would either come up in Angul in Odisha or Raigarh in Chhattisgarh by end of 2015.
Sources privy to the knowledge told The Pioneer that the Naveen Jindal-led JSPl is negotiating a technology know how sharing pact with lanzatech which is likely to be inked in three to four months, to acquire a technology known as BF Gas to Ethanol. The ethanol produced through this would be used an additive in petrol and will make it more cost effective. Also the technology would hike production of ethanol in the country and in turn reduce India’s import bill, as it is cheaper than petrol.
Once the technology is acquired and is implemented successfully, it would globally be only the second instance of producing ethanol using BF gas. Till date only a company in China has used the technology as a pilot test, sources informed. Ethanol is normally procured from sugarcane.
JSPl, they added, would only have a pact with lanzatech for technological know how and once this is done, it would begin work on setting up the proposed plant. It would finalise the actual location for the plant from either of the two places once it gets the technology as both Angul and Raigarh have sufficient number of BFs.
The initial investment for setting up the plant is currently not known as JSPl is working on it, however, it would be 100 per cent funded by the company itself and the outer limit for debt equity ratio would be 2:1. The company, sources close to the development said, would be open to foreign borrowings and would also look at other methods of raising funds like loan from domestic banks or through export credit agencies (ECAs).
Significantly however, sources added that JSPl would not enter into any joint venture or go for an equity tie-up for the proposed plant.
The plant initially would produce around 1.5 lakh tonnes of ethanol per annum after the first BF becomes functional by end of 2015. However once the plant gets its second BF, which would come around 2018, then the ethanol production is expected to go up to 5 lakh tonnes per annum.
Industry sources said that there is no dearth of BFs in the country and billions of tonnes of gas is produced in them. However, despite putting it to optimum use, a large quantity of gas still goes waste.
Therefore, once the BF Gas to Ethanol technology is acquired and implemented in India, several billions tonnes of valuable ethanol could be produced from unused gas.
In November 2012, the Cabinet Committee on Economic Affairs (CCEA) had made it mandatory for oil marketing companies (OMCs) - Bharat Petroleum, Hindustan Petroleum and Indian Oil Corporation - to blend 5 per cent ethanol with petrol. This step was taken to reduce the fuel import bill and lower India’s dependence on fossil fuel as the ethanol prices are lower than petrol.
OMCs have been blending ethanol with petrol for the past two years but the policy was partially implemented in absence of any clear directive.
Once the new technology is put to use, it would only further enhance production of ethanol in India and may in future allow greater blending with petrol.