International BusinessDeora to meet Pawar next week to salvage ethanol programme
With the acute ethanol shortage derailing the programme to blend the sugarcane extract in petrol, Oil Minister Murli Deora will meet Agriculture Minister Sharad Pawar next week to salvage the programme.
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“We will need 680 million litres of ethanol this year, if petrol is doped with 5 per cent ethanol. But less than 40 per cent of the required quantity has been offered in the tenders floated for sourcing ethanol,” an oil ministry official said.
Moreover, the quantities offered are at rates as high as Rs 40-41 per litre, which make their blending in petrol purely uneconomical.
The cost of making petrol (without including the component of duties and taxes) is Rs 23 per litre and a price higher than that makes ethanol blending uneconomical.
“At present, a price of Rs 21.50 per litre is paid to ethanol producers and oil companies are open for an upward revision in the rates,” the official said. “But the feedback we have indicates that even if we offer a price of Rs 26-27 per litre, not even half the quantity required for implementing the programme across the country would be available.”
Deora would meet Pawar on November 24 to look at ways to salvage the programme, he said.
The Cabinet had asked Deora to ensure compulsory blending of 5 per cent ethanol in petrol, but the shortage meant petrol would have to be sold everywhere without ethanol or the sales would have to be stopped. The government had, in 2006, mandated that ethanol should be blended with petrol in a 5:95 ratio. Subsequently, it stipulated that the amount of ethanol in petrol may be optionally ramped up to 10 per cent from October 2007 and made it compulsory with effect from October 2008.
But oil marketing companies (OMCs) — Indian Oil, Bharat Petroleum and Hindustan Petroleum — could not even implement the 5 per cent blend due to shortage of ethanol and Deora approached the Cabinet Committee on Economic Affairs (CCEA) last week for keeping the 10 per cent compulsory blending plan in abeyance. The CCEA, however, rapped the ministry for failing to implement the 5 per cent programme and instructed it to ensure that the programme was implemented in letter and spirit.