OMCs mull used-lube oil collection centres

Public sector oil marketing companies (OMCs) are giving shape to an ambitious plan to move in the country from the existing, largely informal sector, to a formal set-up focussed on environment-friendly recycling.

The aim is to facilitate an ecosystem where handling of the used oil, which is a hazardous waste, is undertaken in a scientific manner.

Government mandate

At the heart of this joint approach of Indian Oil Corporation, HPCL and BPCL, is the larger government mandate of utilising 25% re-refined base oil for lubricants by 2023.

Given the country’s status as a net importer of base oil — raw material for lubricants —the re-refine and re-reuse plan is expected to lead to substantial foreign exchange savings, conserve resources that are otherwise used for burning and importantly, protect the environment.

In a first step, the three entities have decided to engage consultants to guide them on setting up used lubricating oil collection centres on a pan-India basis.

Besides assisting in establishing the facilities, the consultants would also be required to suggest the standard operating procedures to run them.

Hindustan Petroleum Corporation Ltd. (HPCL) has, on behalf of the companies, invited expression of interest (EoI). Describing it as a beginning, a senior HPCL official said private lube oil firms also need to join the effort as the market share of the three PSU entities was only 38% in the India lube market.

India’s lubricant market is estimated to be about 1.6 million tonnes per annum, excluding process oil, transformer oil and white oils, according to a EoI documents.

Disposal mechanism

The selected consultants would be required to study the current disposal mechanism, identify the problem areas in terms of collection mechanism, storage methods and reverse logistical arrangements.

The work involves analysing the government regulations, looking at the best practices abroad, chalking out design/business case, including by suggesting a workable pricing mechanism, the official said.

A tall order indeed considering the different category of users/generators from automobile owners to varied industries and institutional users such as railways, besides a number of collectors and aggregators in the informal sector. There also are around 400 re-refiners registered with pollution control boards who, incidentally, are facing difficulty in procuring used oil as they are unable to pay remunerative prices to the collectors.