Implement ethanol blending, say sugar firms

The sugar industry has urged strict implementation of the petrol-ethanol blending programme. It has used the Union government's current worry on controlling a widening trade deficit as an important argument.

Early this year, the Cabinet Committee on Economic Affairs directed the government-owned oil marketing companies (OMCs) to blend at least five per cent of ethanol with petrol by the end of this financial year. For this, the OMCs would require at least 1,050 million litres. They've floated tenders and finalised bids for 400 mn litres of the total offer from the industry of 550 mn litres. However, distillery units (sugar mills' ethanol producing plants) are still awaiting supply orders from the OMCs.

The prolonged delay translates into higher foreign currency outgo, apart from putting sugar mills' distillation plans into uncertainty, the industry has said.

The Indian Sugar Mills Association (Isma) has said at the current rupee-dollar exchange rate, if there is 400 mn litres of ethanol blending with petrol, there would be a saving in foreign currency of Rs 1,844 crore. If the entire annual requirement of 1,050 mn litres of ethanol (between October 2013 and November 2014) for blending is sourced, the government can save Rs 4,841.5 crore. In the period from August this year to November 2014, it has said, Indian distilleries are set to produce 1,450 mn litres of ethanol. If utilised fully, these can save about $1.1 billion in foreign exchange.

According to reports, the Prime Minister has asked the petroleum ministry to see if the year's oil import bill could be reduced by $25 bn. Isma notes oil imports are a third of the country's total import bill.Mills struggle to make a profit from the sale of sugar, subject to various controls. The importance of byproducts has grown, as a result.