The last year had been bad for the oil companies. The government had passed a notification on January 1, 2003, making it mandatory to market petrol doped with 5% ethanol. The notification was for nine states and four union territories.
However, oil companies are finding it difficult to procure ethanol at the right price. Hindustan Petroleum Corporation Ltd (HPCL) managing director (MD) MB Lal said that the oil companies were buying ethanol at Rs 21 per litre. He added that even if 10% doping is undertaken, the total requirement of ethanol would be about 10 million tonne annually. Indias petrol requirement is 112 million tonne per annum.
Bharat Petroleum Corporation Ltd (BPCL) director (refineries) Mukesh Rohatgi added that petrol and diesel would continue to be the major fuel even as the industry is exploring for alternate fuels in view of the increasing demand for transportation fuel. Hence, the need for more ethanol. BPCL has set up doping facilities at 39 locations all over the country but is not able to run them as there is not enough ethanol.
A senior Indian Oil Corporation (IOC) official said that the ethanol is purchased by the Oil Industry Trading Committee in behalf of all the oil companies. The purchase is made through a tender. Last year has not been good for the oil companies since the response to the tender was encouraging. The pricing of ethanol has also been an issue.
He added that the ethanol manufacturers have been demanding higher price for the commodity. However, this is not feasible for the oil companies since they have to pay for the transporting, storage as well as other logistic charges for the commodity. Last year, the government also withdrew the concession of 30 paise per litre of petrol towards blending of ethanol.