Oil cos say 10% ethanol blending possible, if states don’t interfere

Oil cos say 10% ethanol blending possible, if states don’t interfere
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First Published: Fri, Aug 31 2007. 01 37 AM IST
Updated: Fri, Aug 31 2007. 01 37 AM IST
New Delhi: Indian fuel marketers say they are prepared to procure more ethanol from companies and don’t see major hurdles if the government moves ahead on a recommendation to make it mandatory for 10% blending of ethanol in petrol for motor vehicles.
“We have already tied up 82% of the blending programme covering most states and Union territories, and are in a position to accept government’s initiative in case it decides to implement blending at 10%,” said a senior official at Indian Oil Corp. Ltd (IOC).
The current recommended blending level is 5%, but several states have baulked at doing so. Mint reported on 29 August that a group of ministers have recommended doubling the blending percentage across the country.
Meanwhile, the Bureau of Indian Standards (BIS) and the Society of Indian Automobile Manufacturers (Siam), both of which have to give clearances for the 10% blending to become the norm, have started preparations. “A working group has already been formed, either the standards relating to gasoline will be modified or a new standard will be issued,” said a senior government official at BIS who didn’t want to be named.
According to Dilip Chenoy, director general, Siam, ethanol blending should happen on a consistent basis as vehicle engines need to be tuned in order to accept blended petrol. “Siam also feels the blending levels should be in the same proportion across the country so that same efficiency of engines can be maintained,” said Chenoy. He, however, cautioned that some older vehicles may have problems using such blends.
Ethanol in India is derived from rectified spirit, which in turn comes from molasses, a by-product of manufacturing sugar. As higher ethanol production could have an impact on the manufacture and sale of potable alcohol, a major source of state revenue as well as political patronage, it remains a politically sensitive issue in ­India.
The IOC official, who did not want to be identified, said 450-460 million litres of ethanol has already been secured and about 150-200 million litres have been purchased by fuel retailers, or oil marketing companies. They include IOC, Hindustan Petroleum Corp. Ltd and Bharat Petroleum Corp. Ltd.
The total requirement of ethanol at 10% blending at current estimates is 1,130 million litres.
Although the government directed these companies to sell petrol blended with ethanol in September across 20 states and four Union territories and set a deadline of November 2006, the marketing companies could not adhere to deadlines largely due to levies—the duty on ethanol imposed by states on ethanol brought in from other states. This levy also differed from state to state and ranged anywhere from Re1 a litre to Rs6 per litre.
While several states have reduced this duty, some, such as Orissa, which does not produce any sugar cane, continue to impose a levy of Rs3 per litre.
Similarly, West Bengal and Tamil Nadu have also been dragging their feet.
A significant shift into sugar cane by farmers producing other crops, such as rice, because of higher cane prices, could also pose both environmental—sugar cane is hugely water-intensive—as well as commodity supply issues. But India currently produces nearly 29 million tonnes (mt) of sugar and consumes only around 19mt with analysts suggesting that imbalance is unlikely to go away anytime soon.
Even in Tamil Nadu, which has stopped ethanol blending to make sure that the rectified spirit, which can go into ethanol or alcohol production, ends up with the potable alcohol industry, is taking a relook. “Some state government meetings have happened recently and we hope the outcome will be positive,” said a senior official of a sugar company in the state which was producing ethanol earlier. Oil marketers say they have started work in Gujarat earlier this month and will start work in Madhya Pradesh and Kerala soon. Madhya Pradesh, which had a levy of Rs3.5 per litre, issued a notification last week reducing it to Re1.
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First Published: Fri, Aug 31 2007. 01 37 AM IST