Warning: refiners threaten to cancel ethanol tender

Vol 6, PW 23 (29 Jan 03) Midstream & Downstream

RAM NAIKS dream of blending alcohol-based ethanol with petrol is turning into a nightmare forIndia'soil refiners.

Many are now considering cancelling the tender they floated last September for 103,000 tonnes of the stuff from January to March. The reason Unwillingness by local suppliers to lower the price.

For the past three months the refiners have been trying to persuade the Ethanol Producers Association of India (EPA) to quote an "affordable rate" of less than Rs14, 000 ($291) per tonne, the "import parity" price, so that ethanol blended petrol could be priced lower than regular petrol. Sadly, the powerful sugar lobby, backed by Naik, is unwilling to budge.

It first quotedthe astronomicalprice of Rs 26,000 ($541) per tonne, which after hard bargaining, the oil companies managed to lower to Rs17, 000 ($354) per tonne. "We are really annoyedwith these sugar wallahs," an oil company director tells PETROWATCH.

"We are being brutalized because the minister iskeen on this project. If they don't lower their price, we'll cancel the tenders on technical grounds." Contacted by this report, EPA secretary R.

S Naik saidthe Rs17, 000 per tonne price is due to a severe shortage of sugar cane, resulting inlower production of molasses and ethanol. "We are trying to set up new factories and processing units to overcome the short supply," said Naik.

"The oil companies should give us our due." Deadlock on price has forced the oil ministry to extend the deadline for the compulsory use of ethanol in petrol in Uttar Pradesh, Maharashtra, Punjab and Haryana from 1st January to 31st January.

LNG Summit