Balmer Lawrie plans foray into alternative fuels, to invest 3 bln rupees
Informist, Wednesday, Sep 27, 2023
By Avishek Rakshit
KOLKATA – Balmer Lawrie & Co Ltd is set to enter the business of manufacturing ethanol or hydrogen fuel in the coming few months and will invest 2.5-3.0 bln rupees in the project, Adika Ratna Sekhar, chairman and managing director of the state-owned company, told Informist. He said a tender to select a consultant, who will conduct a feasibility study and submit a project report, will be floated shortly, after which, the plan will be put into action. This project report will be sent to the government.
"Under all circumstances, in the next six months we are going ahead with our plan of either manufacturing ethanol or hydrogen fuel," Sekhar said.
The project will mostly be funded from the company's internal accruals, which stand at 11.8 bln rupees. If needed, Balmer Lawrie could also opt for a loan at an interest rate of 6-8% which, Sekhar said, is serviceable.
If the Miniratna public sector undertaking goes ahead with ethanol manufacturing, then the plant will be set up near oil refineries in Andhra Pradesh. "If it is hydrogen fuel, then we need to check and arrive at a feasible location," he said. "We will make ethanol from rice husk and not sugarcane, so Andhra Pradesh, which also has proximity to refineries, is a natural choice for us to set up the plant."
Unlike ethanol, which is mostly used by oil refiners to blend fuel and used primarily by the automotive and power segments, hydrogen fuel has varied uses. Hydrogen fuel can be used to blend compressed natural gas which is used at home and distributed by city gas companies. Commercially, hydrogen fuel can also be blended with gas and used to power plants producing fertiliser, steel and cement. Thus, Balmer Lawrie will first decide on the targeted consumer segment for the hydrogen fuel project, and then select the plant's location.
"We do not have land readily available at hand, but getting it will not be a problem," he said.
Although the government is not issuing any new licences to companies for ethanol manufacturing currently, Sekhar said he is hopeful of getting the licence once the feasibility study and project report is completed and submitted to the government. "If we aren't able to get the licence for ethanol, then we will go for hydrogen fuel," he said.
The country's ethanol market is expected to touch 600 bln rupees by 2025, Sekhar said. On the other hand, although an emerging technology in India, the green hydrogen fuel market in the country is seen at around $8 bln by 2030, he said.
"The economic viability of green hydrogen production is yet to be established, but the government is ambitious about it," he said.
On Balmer Lawrie running the risk due to lack of a domestic ecosystem for manufacturing hydrogen fuel, Sekhar said, "If we don't venture now, then we will miss the first-mover advantage as there are companies looking at hopping into it."
Reliance Industries Ltd is considering manufacturing low-cost electrolysers for the production of green hydrogen for both domestic and global use. Indian Oil Corp Ltd is also eyeing the hydrogen production space. ONGC Ltd has partnered Greenko to invest $6.2 bln in renewables and green hydrogen, while Bharat Petroleum Corp Ltd is set to set up a 5 MW electrolyser system for green hydrogen manufacturing. GAIL (India) Ltd is also considering setting up an electrolyser for producing 4.3 MT of hydrogen per day.
On the National Stock Exchange today, shares of Balmer Lawrie closed 0.5% higher at 154.10 rupees. End