🌿 Environment & EcologyMAINS · GS3.14 · GS3.9

Kandla's Phase II buys twice the green fuel capacity for less money

India's first port-based e-methanol plant will sell at US$750 a tonne against a global US$1,300. The inputs that make that possible are supplied in kind and never priced.

What happened

Foundation stone laid at Deendayal Port Authority, Kandla for India's first port-based e-methanol plant - 150 tonnes per day, Rs 2,300 crore.
A joint venture of DPA and Assam Petro-Chemicals Limited, Namrup, with capital split 76:24.
Phase I: 50 tpd, Rs 1,200 crore, by January 2027. Phase II: 100 tpd, Rs 1,100 crore, by March 2027.
Target price US$750 a tonne against a global US$1,300; fuel for ships on the Asia-Europe International Trade Corridor.
DPA contributes Rs 567.32 crore equity, 75 acres, desalinated water and renewable energy as green hydrogen; 3,500+ jobs expected.

For Prelims

e-methanol: methanol synthesised from renewable power, water and biogenic CO2 - a drop-in marine fuel. The "e" is the electricity; the carbon must come from biomass, not fossil sources, for the fuel to count as green.
Deendayal Port Authority: the major port at Kandla, Gandhidham, Gujarat. Its contribution here is land, desalinated water and green hydrogen, not just capital - a port acting as an energy landlord.
Assam Petro-Chemicals Limited: the partner, based at Namrup, Assam - which is in the Minister's own Dibrugarh constituency. A north-eastern chemical firm operating on the Gujarat coast.
Modular scaling: the plant is built as scalable modules, which is why Phase II costs less per tonne than Phase I - the shared utilities are paid for once.
Net Zero 2070: India's net-zero target year. Shipping fuel is one of the "hard-to-abate" uses where electrification is not available, which is what makes green molecules rather than green electrons the answer.
The wider port programme: a Rs 1,520 crore DPA-Cochin Shipyard project at Vadinar, and a proposed greenfield shipbuilding and repair cluster at Kuchhadi, Porbandar, with in-principle approval.
The stated maritime goals: 100 new ships in the merchant fleet over five years, and a place among the world's top five ship-owning nations by 2047.
Why a port and not an inland site: the buyer is the ship. Bunkering green fuel where the vessel already calls removes the transport leg that would otherwise carry its own emissions and cost.

For UPSC: This is the sharpest available example of an industrial decarbonisation project with numbers you can actually test. Use it on hard-to-abate sectors and green hydrogen derivatives, on ports as energy infrastructure rather than cargo infrastructure, on centre-state and interstate industrial cooperation, and as a case where cost competitiveness in a green product rests on public assets contributed in kind.

What it is NOT: No biogenic CO2 source is named, and without one the fuel cannot be made or called green - it is the binding constraint on every e-methanol project and it is absent here. The release does not price the 75 acres, the desalinated water or the green hydrogen, so the US$750 target price cannot be tested against the cost of the inputs. It does not reconcile a 76 per cent capital share with Rs 567.32 crore of equity in a Rs 2,300 crore project, and does not say what carries the rest - debt, in-kind valuation or later tranches. It gives no offtake agreement, no buyer and no volume commitment from any shipping line, and no renewable capacity figure for the power the plant will need. It also does not explain how Phase II, at twice the capacity, finishes two months after Phase I.

For Mains

Syllabus: GS3.14 · GS3.9 · Linkage L2

Anchor

Phase I of India's first port-based e-methanol plant will add 50 tonnes a day for Rs 1,200 crore. Phase II will add 100 tonnes a day for Rs 1,100 crore. Twice the capacity for less money: about Rs 24 crore per tonne of daily capacity in the first phase and about Rs 11 crore in the second. The release calls the design "scalable modules" and leaves the arithmetic to the reader.

Substantiation (data)

The project is Rs 2,300 crore for 150 tonnes a day at the Deendayal Port Authority, Kandla, in partnership with Assam Petro-Chemicals of Namrup, split 76:24 on capital. At full output that is roughly 54,750 tonnes of marine fuel a year, aimed at vessels on the Asia-Europe International Trade Corridor and priced at about US$750 a tonne against a global US$1,300. More than 3,500 direct and indirect jobs are expected, and it sits beside a Rs 1,520 crore shipbuilding project at Vadinar.

Position

Putting the plant inside the port is the correct decision and the reason the economics work at all. The buyer is a ship that already calls at Kandla, so there is no transport leg between production and bunkering. The port supplies the land, the desalinated water and the renewable power, which means a public asset is being converted from a cargo landlord into an energy landlord - a genuine change in what a major port is for.

Counterpoint

The US$750 price is the claim on which everything rests, and it is unaudited. Three of the plant's major inputs - 75 acres at a major port, desalinated water and renewable energy as green hydrogen - are contributed in kind and nowhere valued. A price that is 42 per cent below the global rate may reflect modular engineering, or it may reflect inputs that were never charged to the project. The release gives no way to tell.

Problematisation

e-methanol needs biogenic carbon dioxide, and the release names the input without naming a source. Biogenic CO2 has to come from biomass, fermentation or captured process gas, and securing it at scale is the constraint that has slowed such projects elsewhere. A foundation stone laid in September for a January 2027 commissioning, with no carbon source disclosed and no offtake agreement announced, leaves the hardest part unstated.

Conclusion

Treat this as the right project structured in the right place with two numbers still missing: where the carbon comes from, and who has agreed to buy the fuel. If both are answered, Kandla becomes a bunkering point on the Singapore-Rotterdam route rather than a demonstration plant, and the Rs 11 crore per tonne of Phase II becomes the number every other Indian port will be measured against.

Deploys into: Hard-to-abate decarbonisation and green molecules · Ports as energy infrastructure · Net Zero 2070 and green fuel exports · Public assets contributed in kind and unpriced

Ministry of Ports, Shipping and Waterways · 2026-09-26 · PRID 2315327 · PIB source ↗