The union petroleum ministry and the oil companies, including IOC, BPL and HP, would sign an agreement and make an official announcement to this effect soon, joint secretary and executive director at PCRA, Leena Mehendale said at a workshop in Jaipur.
The bio-diesel's cost is around Rs 32 per litre after refining, however, the Centre would provide subsidy on it to the oil companies, Leena said.
Indian railways also decided to run freight trains on bio-diesel, she said. The requirement of diesel was expected to grow from over 39 mmt in 2001-2002 to 52 mmt in 2006-7 and about 66 mmt in 2011-12, she said.
The domestic supply of crude oil will satisfy only about 22 per cent of this demand and the rest will have to be met from imported crude, she added.
Bio-diesel extracted from jatropha plants results in substantial reduction in unburnt hydrocarbons, carbon monoxide and particulate matters.
It has no sulphur, no aromatics and has about 10 per cent built-in oxygen, which helps it to burn fully.