IOC, HPCL, BPCL shelve investment plans in Brazil

State-run Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) have shelved plans to invest in sugarcane farms in Brazil for producing ethanol due to the economic slowdown and resource crunch.

In a written reply to a question in Rajya Sabha, Petroleum Minister Murli Deora said the three oil marketing companies (OMC) had explored the possibility of acquiring sugarcane acreage and putting up ethanol manufacturing units in Brazil.

"The project was found to be feasible and strategic for the Indian oil industry. However, in view of economic slowdown and resource crunch, OMCs are not contemplating any investment in Brazil to set up an ethanol project at present," he said.

The three firms had planned to jointly buy or lease plantations and related units for producing ethanol, a by-product of sugarcane that is doped in petrol to reduce dependence on imported oil.

IOC, BPCL and HPCL were working on deals to acquire 15-35 per cent stake in two of the largest Brazilian integrated ethanol players -- Louis Dreyfus Commodities Bioenergia and Infinity -- and 50 per cent equity in new plantations/projects of smaller firm Rezek.

Indian oil firms were to form a joint venture company for ethanol investments and share half of the equity in it. The remaining half ownership was to be offered to the Brazilian partners.