Ethanol-blended petrol to cut import bill by Rs 18K crore | business | Hindustan Times
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Ethanol-blended petrol to cut import bill by Rs 18K crore

business Updated: Jul 29, 2014 02:38 IST
Anupama Airy
Anupama Airy
Hindustan Times

The NDA government is pushing for ethanol-blended petrol to become a reality, which could bring down India’s oil import bill by an estimated Rs 18,000 crore a year

Sources revealed that Prime Minister Narendra Modi, at a recent meeting, asked cabinet secretary Ajit Seth to meet petroleum ministry and food department officials to expedite the process of ethanol blending with petrol.

“The focus of this government is to bring down India’s oil import bill,” a senior petroleum ministry official told HT. “Blending of ethanol with petrol will help bring down India’s growing dependence on crude oil imports, which costs the country $150 billion or Rs 9 lakh crore per annum.”

According to industry sources, the government can save anywhere up to $3 billion (Rs 18,000 crore) a year, by blending 10% ethanol with petrol.

Moreover, the government believes that sugarcane farmers are likely to benefit from the move as ethanol is a by-product of sugarcane. Farmers also feel that it could get them a good price for their crop.

In 2008, the government announced the National Policy on bio-fuels, mandating a phased implementation of blending ethanol with petrol in various states. However, the process has been delayed due to over-pricing and procurement issues.

In November 2012, the Cabinet Committee on Economic Affairs decided that 5% mandatory ethanol blending with petrol should be implemented across the country and achieved by June 2013. So far, oil marketing companies have managed to achieve only 1.37% blending.

Sugar industry officials said that in recent tenders floated by oil companies for procuring ethanol, they were not willing to pay the benchmark price and insisted on a delivered cost of Rs 44 a litre, against the cost of Rs 46 per litre.

Petroleum minister Dharmendra Pradhan had recently said that the cabinet would take a decision on mandatory blending of 10% ethanol with petrol. This would mean procuring over 2 billion litre of ethanol every year, an oil company official told HT.

The minister had earlier said that state governments have been asked to expedite clearances to ease the availability of ethanol for blending.

Ethanol is also used by the chemical, alcohol and spirits industries. Its cost to these industries also determines its cost to the oil companies.