Ethanol bids in the offing

The government is in the process of inviting bids for supply of 540 million litre of ethanol from state-run as well as private sugar companies, Petroleum and Natural Gas Minister Murli Deora said.

The bids will be open till October 13.

"We are ready to lift any quantity of ethanol from the sugar companies, provided the price is competitive," the minister said.

The supply tenure would be three years.

He also said if the required quantity is procured, the blending of ethanol with petrol can be later raised to 10 per cent. Government will introduce mandatory 5 per cent ethanol blending with petrol across the country from November 1. The government has been pushing to introduce 5 per cent mandatory ethanol blending to cut down on its oil import bill and switch to greener fuels.

Ethanol is made from molasses, which is a key by-product of sugarcane processing.

At 5 per cent blending, the country would require 682 million litre ethanol in 2006-07 (Oct-Sep) sugar season, and the demand could rise to 1.3 billion litre with 10 per cent blending.

According to industry estimates India has about 120 ethanol producing distilleries, which can manufacture 1.2 billion litre ethanol every year.

The ethanol-blending programme has been embroiled in a controversy due to lack of consensus between the sugar companies and oil marketing firms over the pricing issue.

The sugar industry is seeking higher price for selling ethanol to oil marketing companies. The industry was clamoring for a higher price of Rs 23-27 per litre from the current Rs 18.75.