Numaligarh Bio-Refinery: The Trap of Neo-Colonialism
Numaligarh Bio-Refinery is being built at a total cost of Rs. 22594 crores in the Golaghat region of Assam. The country’s largest biofuel refinery is set to consume around 5 lakh metric tonnes of raw bamboo procured from the North-Eastern States of Assam, Arunachal Pradesh, Manipur, Nagaland, and Meghalaya to produce around 6 crore liters of ethanol every year.
The project is expected to be completed by December 2021. Numaligarh Refinery Limited (NRL) will blend the entire quantity of ethanol produced in its bioethanol plant with petrol as per the Indian Government rules and regulations (which allow for blending petrol by up to 10 percent with ethanol).
This refinery is a Joint Venture between the Indian PSU Numaligarh Refinery Limited (NRL) and two foreign companies namely, Chempolis Oy of Finland and Fortum 3 B.V. of Netherlands. The Joint Venture boasts of producing “eco-friendly bio-ethanol and other chemicals from bamboo biomass”. The bamboo waste, after the extraction of ethanol and other chemicals, is to be used as bio-coal for generating power for running the refinery. It is claimed that the refinery unit is entirely powered by renewable energy for its power requirement.
Fortum’s share of ownership is 28%, NRL's 50%, and Chempolis sh’s 22%. So, the Europeans have 50% of the share and 50% of the profits.
As the title suggests, in my opinion, Assam Bio-Refinery in Numaligarh can be the worst way to utilize the Indian bamboo stock.
In a country with the world’s second-largest bamboo stock and bamboo being a material with a plethora of uses, using it to produce bioethanol and wiping out the entire gains in the field of climate change cannot be termed a prudent step with such a high-expenditure project giving so lowly gains. Virtually a “Bamboo Black Hole” for 5 lakh MT of Bamboo, this project needs to be scrapped immediately.
Let me explain why.
Firstly, as we know today, India is trying to usher into an era in the bamboo sector in which, for the first time in decades, so much knowledge has been spreading among the stakeholders, albeit slowly, but still happening. Many more young entrepreneurs are entering this sector with the vision to utilize bamboo in creating various products to replace our everyday unsustainable products. From plastic toothbrushes, timber-based furniture, and synthetic clothing range to bamboo-based products in these segments. And I’m just mentioning a few products here. There are many more out there.
Then such a high utilization of bamboo (in terms of quantity) by this Refinery would severely affect the other new uses of bamboo that are being tried out, such as bamboo silk, bamboo charcoal, and activated bamboo charcoal, which are not only far more profitable than the ethyl alcohol business but also have zero carbon footprints. Bamboo charcoal is also going to help in improving soil fertility by increasing its carbon content thereby reducing the usage of urea and increasing the farmers’ income.
Secondly, the Numaligarh bio-refinery project has a large carbon footprint and would ultimately lead to the burning of 5 million MT of bamboo p.a., which would emit billions of MT of CO2, offsetting all the Indian national targets of climate change mitigation!
Thirdly, we are misguided by the statement of the company that it would lead to great profits and good income for the people and government by selling bamboo to NRL’s refinery. In its document submitted to MOEF & CC (Ministry of Environment, Forest & Climate Change) for Environmental Clearance (EC), the company has stated that they will be buying bamboo at Rs.3741/- per MT, and after adjusting the moisture content, 1 MT of bamboo would effectively cost Rs.5020/ – per MT to the company. At this price, the profit of producing bio-ethanol after adjusting operational costs and margins is around Rs.1290/- per MT. Out of this, 50% of profits go into the coffers of European companies, so NRL Bio-Refinery would be getting only Rs.645/- as profit per MT, while bamboo silk manufacturing gives a profit margin of Rs. 70,000/- per MT. If we go and manufacture activated bamboo charcoal, the profit margin would be Rs.187000/- per MT of bamboo. If we make only bamboo charcoal, then the profit will be Rs. 139000/- per MT of bamboo.
Fourthly, out of this profit, the bio-refinery company is also expected to pay their debt interest, etc., besides salaries. With such low profit margins, it is not possible that the company would be able to pay out its liabilities, and that makes it unviable. Therefore, the company would try all possible ways to increase its profits.
One way to do this is to reduce the cost of raw materials. It has been reported that the bio-refinery is trying to settle the deal at Rs. 1500 /—per MT. That would help the plant boost its profits.
Fifthly, it is a highly capital-intensive industry. Rs. 22600 crores were spent on the installation of this bio-refinery, which will guzzle 5 lakh MT of bamboo every year in the future.
For charcoal and activated charcoal manufacturing, one needs to spend 10 lakhs to 50 lakhs to start the production. Similarly, for bamboo cotton or silk, one spends 20 lakh to 3 crores, and the production is on. So, the capital cost is so low that India can have multiple factories with decentralized production and ownership. Thus, the people would become entrepreneurs like that is seen in the cocoon silk production in India. The production and manufacturing are decentralized in the cocoon silk industry. This has saved silk from union problems, and so many people are employed in it.
In Numaligarh Bio-Refinery, the means of production are owned by an Indian PSU and private companies in Europe, which not only own 50% of the shares but also sell NRL the technology of the project. They have already made profits in plant and machinery. And they might get out of the refinery project once they are break-even or not in losses.
Sixthly, if by any chance the project runs into problems, the Government subsidy and funding are likely to save the day for them. Even in such cases, the Central Government may be compelled to revive NEIIPP (North Eastern Industrial Investment Promotion Policy) or may take other measures to bail out this project with various facilities and concessions. I can only hope that this bio-refinery project should not become a classical example of Neo-colonialism in India.
Seventhly, it’s exploitative. Indian Govt. at the behest of PM Modi through its schemes and projects is trying to uplift the livelihoods of the rural and tribal population. Through the “Bamboonomics” project that I designed for the Ministry of Tribal Affairs, we aimed to increase the income of the tribal population involved in the bamboo sector. The bio-refinery plant will do the opposite. It’s going to reduce their income from bamboo further. It is clear from their financial report that the rates at which they plan to buy per ton of bamboo to increase their profits are going to drive the stakeholders further into poverty. From getting Rs. 30-50 per bamboo pole currently, the bio-refinery plans to buy one bamboo pole for a mere meager amount of Rs.5-10. Just imagine the repercussions of it on the lives of many who are dependent on bamboo. As the bio-refinery is mostly buying bamboo from Government organizations, especially the forest departments, the people are not involved in any way, and that is a point wherein all the possible earnings from bamboo would be reduced to none.
The story of Ballarpur Paper Mill, Gadchiroli, should not be forgotten. The paper mill was buying bamboo at throw-away prices ranging from Rs.600/—to Rs.1500/—per MT. The villagers finally revolted, and the paper mill finally had to close down. The same thing will happen with Numaligarh Refinery. Once people realize that the bamboo is being bought at throw-away prices, it will lead to local eruptions, protests, and violent clashes in a couple of years.
Eighthly, many other raw materials are used to synthesize bioethanol. Why use bamboo? Use other plants or vegetation that currently don’t serve any other economical solution and won’t affect the biosphere. What about bringing Jatropha back into the picture, which was discarded for marketing and pricing reasons, a politics played by the petroleum companies? We need to save our climate, too, and burning 5 lakh MT of bamboo every year would only harm the green environment of the North East.
Lastly, we should also ponder that if bio-refinery was such a profitable venture then why China hasn’t done it, after all, they have the most bamboo stock in the world. But they aren’t going in this direction. What they are doing is creating as many profitable and eco-friendly products from bamboo as possible. Good quality, cost-effective, efficient, and usable products. They are flooding the world market with bamboo products, and in the next 10-20 years, you’ll see the vast difference they would make in replacing synthetic materials with organic, eco-friendly bamboo materials. I’m not saying China is an ecology-loving and climate-protecting country, but that’s what they are doing at the moment by utilizing bamboo. They are driven by the economic benefits of bamboo, but due to bamboo’s eco-friendly nature, China is improving the climate as well.
So, India, with its second-largest bamboo stock, what do you think is the way forward, creating just another ethanol or creating a plethora of profit-earning useful products that have an immense demand already and are more profitable and helpful to the people and stakeholders to boost their income?
Numaligarh Bio-Refinery is doomed to fail. But will the Government dare get rid of it?
