Assured offtake by OMCs to boost ethanol supply

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New Delhi | Published: November 23, 2017 5:41:39 AM

Petroleum minister Dharmendra Pradhan on Wednesday emphasised the need for offtake guarantee by oil marketing companies (OMCs) to increase ethanol supply for blending with fuel.

Dharmendra Pradhan, oil marketing companies, 2G ethanol suppliers, India, hydrocarbon import, Union Cabinet, 2G ethanol bio-refineriesThe remarks come at a time the country, especially the Capital, is witnessing very high pollution levels mostly due to stubble burning by farmers. (PTI)

Petroleum minister Dharmendra Pradhan on Wednesday emphasised the need for offtake guarantee by oil marketing companies (OMCs) to increase ethanol supply for blending with fuel. Speaking at a consultative workshop of stakeholders to chalk out a path for biofuel in India, Pradhan said: “This (using biofuel) is a weapon to reduce pollution we face every year.” The remarks come at a time the country, especially the Capital, is witnessing very high pollution levels mostly due to stubble burning by farmers. A draft national policy on biofuels released during the workshop noted that OMCs have agreed to offtake assurance. “Public-sector oil marketing companies have agreed to sign ethanol purchase agreements with 2G ethanol suppliers for a period of 15 years to provide assured market to private stakeholders and support 2G ethanol initiatives,” said the draft policy. Bio-compressed natural gas, which is a byproduct of 2G ethanol bio-refineries, will also get offtake assurance by state-owned gas marketing companies.

Earlier this month, the Union Cabinet increased the price of ethanol under ethanol-blended petrol programme for supply to oil marketing companies by around 5% for supply period December 1, 2017, to November 30, 2018. While the price has been revised from Rs 39 to Rs 40.85, the actual cost will be higher after accounting for taxes and transportation charges. Prior to July 1, 2017, excise duty on ethanol was 12.5% and state value-added tax varied from 0-8% across states. However, post implementation of goods and services tax (GST), ethanol has been put in the 18% tax slab. Ethanol is also used by chemicals and potable alcohol industry.

Use of biofuel is expected to help the country’s vision to decrease 10% of its hydrocarbon import dependency. India currently imports about 80% of its oil needs. Pradhan said biofuels has the potential to be a Rs 1 lakh crore industry by 2030. The minister also added that the country’s annual diesel consumption could rise to 150 billion litres by 2030 from the current 90 billion litres. He also added that consumption of petrol could rise to 50 billion litres by 2030 from 30 billion litres at present. At present, ethanol blending percentage in petrol is around 2%, compared with a target of 20% by 2030 and biodiesel blending in diesel is 0.5% compared with a target of 5% by 2030. The government’s biofuel strategy includes first and second generation ethanol blending, biodiesel, drop-in quality fuel and bio-CNG. However, Pradhan suggested the consultative group to include use of methanol also in the strategy.

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