Ethanol offtake for blending falls well short of the target

Written by ASHOK B SHARMA | New Delhi, Dec 23 | Updated: Dec 24 2007, 05:44am hrs
The governments programme of mandatory 5% ethanol-blended petrol doesnt seem to be running smoothly. Actual lifting of ethanol by oil companies was only 200 million litre, as against the doping requirement of 550 million litre in the first year of implementation, which is already over.

The sugar industry alleged that oil companies did not lift the required stock they produced. The out-going president of the Indian Sugar Mills Association (ISMA), P Rama Babu told FE, Oil companies do not appear to have taken up the programme as seriously as they ought to have done. We strongly feel that if the programme has to succeed, it is important that an empowered committee is created to oversee its implementation. ISMA suggested that the system of purchase of ethanol through tender, purchases should be made directly from the suppliers at the determined ex-factory price of Rs 21.50 a litre.

It has suggested that newly commissioned ethanol plants be allowed to participate in the ethanol-blended petrol programme. For any shortfall in the earlier state-wise purchase of ethanol, also for additional quantity required for increasing ethanol doping of petrol, the new plants be treated on a priority basis, to bring them at par with existing suppliers.

The government is likely to issue a notification, allowing sugar mills to produce ethanol directly from sugarcane juice or B-heavy ethanol. Mandatory blending of petrol with ethanol would be raised to 10% from October 2008 all over the country, with the exception of Jammu & Kashmir, north eastern states, and island territories, for which ethanol output should increase to 1,200 million litre. The Bureau of Indian Standards would finalise norms for 10% ethanol-blended petrol by March 2008.

The industry has asked for restoration of concessional excise duty on ethanol-doped petrol, and placing ethanol in the list of declared goods, under section 5A of the Central Sales Tax Act, so state governments wouldnt impose tax on ethanol.