The Government?s ambitious ethanol blending programme has run into a big hurdle due to non-issuance of export permits to ethanol suppliers by the state government.
In a letter to the state government on July 25, ministry of petroleum and natural gas secretary GC Chaturvedi has said the oil marketing companies (OMCs) running the programme have told the ministry that they are facing problems in the procurement of ethanol for the states of Punjab, Haryana, Uttarakhand and Rajasthan due to the non-issuance of export permits to ethanol suppliers by the UP excise department.
?HPCL has been following up the matter with the excise commissioner. However, inspite of best efforts, ethanol export permission from UP is yet to be granted,? Chaturvedi has written, adding that ?the smooth supply of ethanol is needed for effective implementation of the ethanol blending programme?.
It may be mentioned that on the back of a vibrant and fast growing sugar industry in the country, the second largest sugar producer in the world, the Centre had decided to kick off a 5% ethanol blending programme from October 2007. The mandatory ethanol blending will not only save foreign exchange as it substitutes petrol but also give better return to about 50 million cane farmers and their families.
To fulfill the 5% blending provision, about 92 crore litre of ethanol was required by the OMCs and against this requirement, contracts were signed with the ethanol manufacturers/sugar mills for 56.88 crore litre, out of which only 29 crore litre have so far been supplied to OMCs. According to sources, the reason for the bad supply is that UP, which is the second largest producer of ethanol in the country, stopped issuing permits for movement of ethanol outside the state since April 1 this year. This has affected the supplies badly.
?For the contracted quantity of ethanol, the ethanol manufacturers and sugar mills had to furnish bank guarantees of around R150 crore as a performance guarantee and in case of default in supplies, the OMCs would deduct money for short supplies and the ethanol manufacturers and sugar mills would have to bear financial loss for no fault of theirs,? said Avinash Verma, DG ISMA.
