Sugar scented petrol on sale from 1st January

Vol 6, PW 20 (04 Dec 02) Midstream & Downstream

CALL IT a business opportunity, or a chance to win favour with oil minister Ram Naik and his pet project to promote the use of petrol blended with ethanol.

Figures from a November review meeting in the oil ministry reveal a huge gap in the availability of installed capacity for the manufacture of ethanol, a derivative of sugar cane molasses. This gap threatens a 1st January deadline imposed by Naik for petrol pumps in nine states to start selling petrol with a 5% ethanol component (see below).

These states are India's largest producers of sugar cane but only Maharashtra - Naik's home state - has surplus ethanol production capacity. Demand v/s production capacity for ethanol in nine states.

Figures in thousand kilolitres/year State Ethanol requirement Ethanol production capacity Andhra Pradesh 36.8 7.5 Goa 4 0 Gujarat 45 0 Haryana 28 0 Karnataka 34 3.9 Maharashtra 75 90 Punjab 35 0 Tamil Nadu 46.2 0 Uttar Pradesh 48 45 Total 352 146.4 Undoubtedly, the ethanol production deficit calls for urgent measures and the oil ministry is closely monitoring the construction of new ethanol factories. "We have asked states to simplify and speed up procedures in issuing permits and licences to oil companies and ethanol suppliers," a source tells this report.

"A licence should be issued within a week from the date of application." If states are unable to set up ethanol production facilities, the oil ministry wants them to waive the sales tax on ethanol brought in from other states. Who benefits Sugar cane growers in Maharashtra.

Yet any suggestion that Naik introduced this policy to benefit his political constituency would be little more than pure speculation, naturally!