ISLAMABAD, March 6: The government plans to encourage investment in extraction of oil from paddy bran, one of the main by-products of the rice milling industry. If successful, the project will initially yield an annual income of between $25 million and $30 million, according to a commerce ministry official.

The official said that in the first phase about 10 mills would be set up near rice mill clusters for extraction of the oil. Under an understanding with the Japanese authorities, technology for such mills would be imported from Japan.

Japan is one of the main producers and users of bran oil. The oil so extracted contains 15-20 per cent edible oil.Research has already been carried out to extract bran oil from indigenous rice bran.

Pakistan produces about 65,000 tons of rice a year and much of the rice bran, which is used as animal feed and fuel.

Commerce Secretary Zaffar Mehmood said bran oil would be the second farm product to be developed for export after ethanol, extracted from molasses by sugar mills. The millers earlier exported molasses in raw form.

He said import of machinery for extraction of bran oil had also been allowed from India. “We expect this industry to flourish in two to three years,” he added.

Mr Mehmood said the bran oil would require refining to make it suitable for human consumption. Initially, the oil would have to be exported to Japan for refining and value addition.

He said an understanding had been reached with the Japanese authorities in this regard during President Asif Ali Zardari’s recent visit to Japan.

“There will be a buy-back arrangement with Japan. They will import the bran oil produced by Pakistani mills for two to three years,” Mr Mehmood said.