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Ethanol Story in India & the status of Ethanol Blended Petrol Programme (EBPP)

Ethanol blended petrol program has been something that government had announced as early as the year 2006 when they had mandated 5% ethanol blended petrol and had informed that the programme would become mandatory from November of 2006. Subsequently, the government dropped the plan as the Oil Ministry had then argued that since there were competing demands on ethanol supply by portable alcohol and chemical Industries, prices of ethanol would shoot up if the programme was made mandatory.

Subsequently, The Cabinet Committee on Economic Affairs (CCEA) in the middle of August this year, cleared a proposal to implement an ethanol blended petrolprogramme (EBPP) programme to enhance benefits to the sugarcane farmers in the country.

The panel recommends the blend percentage up to a limit of 10 percent in the states and union territories, except North- Eastern States, J&K, Andaman, Nicobar and Lakshadweep.

Under the proposal, there will be an ad hoc uniform ex-factory price throughout the country at Rs. 27 per litre for ethanol procured by the public sector Oil Marketing Companies (OMCs) from the date of communication of the order till the time price is recommended by the expert committee and a decision taken thereon by the competent authority.

The proposal relating to variable percentage of blending would ensure that surplus of ethanol available in different states is adequately absorbed in the programme, the Committee said.

The Expert Committee for pricing of ethanol will be chiared by Dr. Saumitra Chaudhury, Member, Planning Commission, with Principal Advisor (Energy), Chairman, Commission for Agriculture Costs and Prices (CACP), Joint Secretary from Ministry of Petroleum and Natural Gas, Joint Secretary (Sugar), a representative of Sugar Industry, and a representative from Oil Industry, as members.

India is also the fourth largest producer of ethanol in the world. Ethanol production in India has an advantage as its production could potentially leave sugar prices unaffected.

From recent reports, it seems like contracts with oil marketing companies for supply of about 600 million litres and delivery has begun. According to the report director general of Indian Sugar Mills Association Abinash Verma made an impassioned plea for the central government to announce the final price of ethanol to be procured by oil marketing companies (OMCs) for blending with petrol.

In a joint presentation to the expert committee, Isma and National Federation of Cooperative Sugar Factories said ethanol use would also “boost income pool of cane farmers.” A committee under C Rangarajan will be recommending a formula for sharing of revenue from sugar and primary byproducts by mills and farmers.

The expert committee must be hearing a lot of divergent views from the Industry and the chemical and IMFL manufacturers have been opposing the mandatory 5% blending and also contend that in case EBPP is to be relaunched, the basis of working out ethanol price will be its calorific value and cane price.

The demand for alcohol requirement is another thing that has seen varied numbers by different industries in the country and this has given rise to numerous divergent views that the expert committee will have to take into account before final price is announced.

What is interesting to note here is that in India unlike Brazil,  the only feedstock is the byproduct molasses.  Hence no  farm land or a food crop are used for making bioenergy.

India has also been keenly promoting jatropha, a hardy oil rich seed which can be grown on marginal land and is a good sources of biofuel.

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