Shortage may hit plan to blend petrol with ethanol

NEW DELHI: The much-publicised nationwide programme of ethanol blending of petrol scheduled to take off from November this year may hit a road block. It is feared that this would lead to the shortage of ethanol for industrial use. Companies like Reliance, Jubilant Organosys, India Glycols and Laxmi Organic Industries are big consumers of industrial alcohol.

The Planning Commission has called a meeting of key ministries and other stake holders early this week to discuss the implications, particularly the resultant shortage of alcohol — a raw material for India’s globally acclaimed pharmaceutical, textile and agrochemical industries, sources said.

The ethanol blending programme is subject to its commercial feasibility as per the petroleum ministry’s notification, which says the government can modify the percentage of ethanol and the areas where blended gas has to be supplied. An alcohol production of 176 crore litres from an anticipated bumper sugar crop of 220 lakh tonne in the next 12 months, will not be able to meet even the existing 180-crore litre requirement by the Rs 4,400-crore domestic chemical industry.

Molasses, from which alcohol is produced, is a by-product of sugar. Blending ethanol with petrol will add to the pressure, said drug major Jubilant Organosys’ executive director and Indian Chemicals Council’s ex-president SN Singh. Alcohol import has significantly gone up in the last three years, he said.

Besides the November deadline, the issues to be debated during the meeting will include incentivising the potable alcohol sector to shift from molasses (the cheapest raw material) to grains and lowering the import barrier of 150% duty on potable and 10% duty on industrial alcohol. For the chemical, pharmaceutical and textile sectors, the shortage will be more damaging than the potable alcohol industry.

“Potable alcohol has only up to 40% alcohol content and the rest is water as against the chemical industry’s higher requirement due to many layers of value additions. Increase in the price of ethanol will not affect retail liquor price significantly, while the chemical and pharma sectors competing in world markets will have to absorb any increase in the price of the raw material,” said a chemicals ministry official.