The government may have to scale down its ambitious programme of doping petrol as availability of ethanol is far short of demand. Besides, another powerful user industry for ethanol ? alcohol beverages ? will not settle for lesser off take for their feedstock. As per the government?s own estimates, ethanol production is expected to go up to 2,200 million litre this year (November 1, 2010 to October 31, 2011) from last year?s 1,600-1,700 million litre. Of this, close to 1,000 million litre may go for industrial use in sectors like pharmaceutical, paints, garments and nail polish. A similar amount may go to the potable alcohol industry.
What remains is not sufficient for the programme of blending ethanol (5%) in petrol, which was originally estimated to require 1,050 million litre this year. Oil retailers have contracted for only about half of this requirement. The powerful potable alcohol industry, which contributed Rs 62,000 crore as state excise duty last year, has the strong backing of these regional governments and will not settle for lower uptake of ethanol, said an official on the condition of anonymity. This year, the alcohol beverages industry?s contribution by way of state excise duty is expected to be Rs 65,000 crore, the official said.
Oil marketing companies now buy ethanol at a price of Rs 27 a litre, which is an ad hoc price decided by the Centre before an appropriate pricing formula is evolved. In the last six months, ethanol, which gives much less energy per unit compared to petrol, has become as expensive as petrol in global markets, making imports unviable for doping purposes. In fact, the very idea of doping petrol with ethanol was to make use of the surplus ethanol in the country in a meaningful way. Within the country, petrol is still costlier because of taxes.
The government is now looking at arriving at a dynamic pricing formula for buying ethanol from farmers, which, when blended with petrol, will reduce the country?s petrol consumption by 5%. The blended petrol programme was launched from Nov 1, 2006.
