Avista, IFP Urge Price Support in India

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Avista Oil and IFP Petro – two companies partnering to develop a waste lubricant rerefinery in India – said recently that price supports are needed for a rerefined base oil business to take off in the country.

India is the third-largest consumer of finished lubricants in the world, after the United States and China. Based on the government’s Circular Economy Report, only 15% of used oil is rerefined. Lawmakers in New Delhi have made significant progress toward the country being more conducive to rerefining. In 2023, Parliament adopted a mandate for lubricant companies to ensure that all finished lubricants sold must contain at least 5% rerefined base oil. This will increase to 50% by 2029.

For all the state prodding and existing collection network, rerefining in India still doesn’t look profitable. For it to be a success on a wide scale, some type of financial support is needed.

“There are barely any examples of countries or waste management streams that have managed the transition from an informal and less regulated market towards a formal and economically feasible market without some kind of support. Whether that is in a form of subsidy, environmental tax, EPR regime or whatever,” said Mario Majic, head of strategic business development, marketing and corporate governance at Germany-based Avista.

Avista operates waste oil rerefineries in Germany, the US and Denmark. IFP has operations in Ghaziabad. In 2023 the companies formed a partnership to explore the feasibility of developing a rerefinery with capacity of 100,000 t/y.

India has one of the highest waste oil prices and lowest base oil prices, while fuel is expensive. This softens the attractiveness of investing in rerefiners instead of less sophisticated and cheaper ways of processing waste oil, Majic explained.

India has 257 registered waste oil collectors with capacity to gather 1.39 million metric tons per year. Avista remains confident thatin the market’s potential to accommodate them all.

“India’s waste oil potential is far bigger than the current capacities to convert it into base oil that meets the requirements for lubricant formulation,” he said. “If it is a clear vision to transform waste oil into something of higher value, the existing facilities will not make that happen.”

Despite abundant feedstock for a refinery and a dynamic economy, there are unique caveats in the Indian market, Majic believes.

“India, maybe more than any other country in the world, can learn, adapt and innovate much quicker than we might expect. However, there is no ‘one-size-fits-all’ solution when it comes to the management of waste oil. India has other circumstances than European countries. It is much more fragmented and the level of awareness about waste oil and its hazards might not be as high as it should be.”

No final investment decision has yet been made on the joint rerefinery.

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