Government makes 5% ethanol in petrol mandatory

Monday, November 23, 2009, 19:03 by Business Editor

New Delhi: The Union Cabinet has issued a directive to the Ministry of Petroleum and Natural Gas to make it mandatory for all oil-marketing companies to sell petrol mixed with 5% ethanol. The Central Government had, in November 2006, ordered that 5% ethanol be blended in petrol to be sold all throughout the country – except Jammu and Kashmir and the north-eastern states – and that the quantity of ethanol in petrol be optionally raised to 10% from October 2007, and then made compulsory from October 2008.

However, the oil-marketing companies (OMCs) Hindustan Petroleum Corporation Limited, Indian Oil Corporation, and Bharat Petroleum Corporation Limited could not ensure the mandatory petrol-ethanol blend, citing as reason the scarcity of ethanol.

Meanwhile, Murli Deora, Union Minister for Petroleum, is aggressively pushing for mixing ethanol mix with petrol.

Deora had recently held a meeting with fuel retailers as well as owners of sugar mills in order to seek their support in the government’s efforts at blending ethanol and petroleum.

As against the requirement of 68 crore litres of ethanol in 2009, Deora said, the tenders floated by oil-marketing firms got bids for only 40% of the total volume of ethanol required.

Murli Deora, who has urged the Cabinet Committee on Economic Affairs to keep the order on 10% compulsory blending of ethanol in abeyance, told reporters that the Union Cabinet has taken a solid decision to the effect that oil-marketing companies must blend 5% ethanol in petrol.

In addition, the Union Cabinet decided to impose harsh penalties if oil-marketing firms sold petrol without 5% ethanol in it.

According to Farooq Abdullah, Union Minister for Renewable Energy, the Ministry of Petroleum has been instructed to ensure that all oil-marketing firms implement the government’s directive to blend 5% ethanol with petrol.

Media reports say that Minister for Petroleum Murli Deora is meeting Union Minister for Agriculture Sharad Pawar on November 24, 2009, over the ethanol-blending plan, which could not yet be implemented owing to the severe dearth of sugarcane extract.

The government’s directive on using ethanol in petroleum will lead to the revival of many ethanol factories in the country that have been closed down for about 2 years.

Ethanol-producing factories, costing about Rs 2,500 crore, were established after the Union Government announced the ethanol-blending plan in 2002. Most of these factories have been, however, idling for nearly 2 years after the Central Government relaxed the requirements on ethanol in petroleum in 2005.

In a statement, the Indian Sugar Mills Association (ISMA) said though the mills can produce the required quantity of ethanol, many regulations are obstructing its release.

According to M N Rao, acting secretary-general of the Indian Sugar Mills Association, the fact that different states levy different taxes on inter-state transport of ethanol makes the movement of ethanol from one state to another a major problem.

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