Plans to increase ethanol content in gasoline face delay due to procurement problems The government has plans to increase the amount of ethanol in blended gasoline from 5 per cent to 10 per cent. This is likely to be done during the course of the ongoing calendar year. "Measures have been taken to make auto fuels environment-friendly and the introduction of ethanol-blended petrol would also bring more income to the farmers," says Murli Deora, minister for petroleum and natural gas. According to Deora, during the current year, his ministry would implement 5 per cent ethanol blending, by procuring an estimated 145 million gallons of ethanol. "We plan to enhance this programme to 10 per cent blend as early as possible," the minister adds. India, being a fuel-dependent country, imports nearly 70 per cent of its crude requirement. In a bid to conserve fuel and make it environment-friendly, the government had taken a decision five years back to blend ethanol with diesel. As of now, nine states (Uttar Pradesh, Delhi, Madhya Pradesh and Chhattisgarh, Tamil Nadu, Andhra Pradesh, Bihar, Maharashtra and Goa) and four Union territories in India are using petrol with 5 per cent ethanol. Though the government had decided to make it mandatory all over the country by November 2006 (with exception of Jammu & Kashmir, north-eastern states, Andaman & Nicobar and Lakshad-weep), it has not been able to implement it, "because of the delay in procurement of ethanol. All options are being considered - from importing to buying from local sugarcane manufacturers," says an official from the ministry of petroleum and natural gas. Oil marketing companies have since been scouting to source more ethanol (which is made from sugarcane molasses) from the local market and also through imports - mostly from Brazil. During the prime minister's visit to Brazil in October 2006, oil marketer Bharat Petroleum Corporation Limited (bpcl) had sent its cmd Ashok Sinha, while Reliance Petroleum sent R.C. Sharma (head of its ethanol programme) to promote the cause of the oil marketing psus. But nothing came of it. "We are looking at acquiring ethanol acreage in Brazil for two reasons - namely the availability of ethanol and the technology. They use a 20 per cent blend of ethanol in diesel," says an official from bpcl. Similarly, Reliance too has been scouting around to acquire acreage in Brazil. "We have not signed an agreement yet and are also exploring other markets in South America," says a source from Reliance. "At present, we are blending only 5 per cent of ethanol in petrol. However, in a staggered way, are going to increase to 10 per cent and, if possible, even 20 per cent (like Brazil). To achieve this, we would require to import ethanol and, instead of waiting till the last minute, we are gearing up to stack our supplies now," the source from bpcl adds. According to estimates, the total quantity of ethanol required by the 10 states that are using ethanol-blended petrol, stands at 377,000 kilolitres per annum. When ethanol-blended fuel is used in all states, the requirement would increase to 567,000 kilolitres per annum. However, sources point out that none of the deals could be firmed up in Brazil, as there was an active sugar lobby from India working against it. "We in India are capable of providing ethanol (with 5 per cent blend in petrol) and, in fact, with our production projected to be 23 million tonnes of sugar in 2007-08, we would be in a position to provide ethanol, even if the blend was increased to 10 per cent. So where is the need to go so far away to invest in another country?" asks a member of the All India Sugar Mills Association. India, the world's second-largest producer and biggest consumer of sugar, is likely to produce 26.5 million tonnes of the sweetener in the crop year ending September 2010. It is understood that the oil marketing psus have invited bids from sugarcane manufacturers to procure ethanol. This gesture notwithstanding, the issue is not going to be resolved soon, as there is a glitch relating to ethanol pricing that needs to be overcome first. The price of ethanol (which is made out of fermented molasses), hovering now around Rs21.50 per litre, increases with the levy of interstate import and export duty. "Soon, it becomes commercially unviable to pay a duty on this price. This issue needs to be sorted out at the earliest," says an official from an oil marketing company. India's import of ethanol is about 110 million tonnes per year, at $50-70 per barrel. The expenditure on crude purchase impacts the country's foreign exchange reserves in a big way. As a result of this, the ministry of petroleum and natural gas is committed to the use of ethanol as fuel, as it is expected to benefit sugarcane farmers as well as the oil industry in the long run. Ethanol (which can also be sourced from wheat, corn, beet and sweet sorghum) is one of the best tools to fight vehicular pollution, contains 35 per cent oxygen that helps complete combustion of fuel and, thus, reduces harmful tailpipe emissions. It also reduces particulate emissions that pose a health hazard. While there are issues relating to ethanol prices and duties that need to be sorted out among the sugarcane manufacturers, the states and the oil marketing companies, one hopes that these are resolved at the earliest, to ensure a cleaner environment.