Hic, hic hurray! Toast for wheelies

BANGALORE: A PMO-inspired inter-ministerial move could see molasses alcohol being set aside exclusively for gasohol — ethanol blended automobile fuel — in the near future. Sources said moves were underway, with the Centre indicating the need for the potable alcohol (liquor) industry to exit molasses alcohol completely in the next 3-4 years.

The initiative, coming in the wake of the politically sensitive fuel price hike, is significant, though deliberations are still in early stages. The Centre has mandated 5% ethanol blending in automobile fuel in many states and Union territories, but soaring alcohol demand and deficit production have posed problems.

Hence, the move to keep molasses, the most widely available and cheapest feedstock, exclusively for gasohol. To demonstrate its resolve, the Centre is mulling hiking the mandatory blending of ethanol from 5% to 10% by next year, sources said.

The paucity in overall alcohol requirement — for potable, industrial and gasohol purposes — has risen consistently in the last three financial years. The deficit touched 11, 642 lakh litres, up from 4,873 litres in FY05 and 275 lakh litres in FY04. The total alcohol production stood at 18,425 lakh litres in FY06, whereas the cumulative requirement was estimated at 30,067 lakh litres.

Both IMFL and country liquor sectors, which are the main users, required nearly 14,625 lakh litres in the last financial year, followed by industrial demand estimated at 9,770 lakh litres, and gasohol pegged at 4,900 lakh litres. Now, the Centre is keen on the liquor industry’s migration to grain spirits in a timebound manner.

It is argued that volatility in molasses cost — on account of decontrolled pricing and increasing pressure on production base — makes grain an equally viable substrate for the liquor industry.

In fact, the liquor industry has started shifting to grain from molasses with MNCs like Seagram running operations profitably. In recent months, domestic spirits majors have embraced grain alcohol and plan expand capacities.