NAGPUR: Even as the new government has revived plans to blend ethanol in petrol, the sugar industry for which it is a by-product, says the move may not succeed unless they get a better deal. Ethanol blending is done even today but on a smaller scale. Oil marketing companies say it is because not enough ethanol is available. On the other hand, the sugar industry blames oil companies for not offering a good price. Getting an assured market from the oil sector can also help the sugar industry tide over the fund crisis it is going through. The three oil PSUs combined had invited bids to procure 140 crore litres of ethanol for the current calendar year and got offers for 55 crore litres. But only 39 crore litres were lifted finally for Rs39 per litre, said a source. Apart from the rate, red tape also discourages the sugar sector from selling ethanol to oil companies. The payment comes after 45 days of supply. As a result, sugar millers find it better to cater to the liquor industry which pays in advance. During distillation, first alcohol is generated and a further process makes ethanol. "Since alcohol fetches Rs41 a litre, sugar industry prefers the liquor maker, instead of going for making ethanol which needs one more round of distillation," says Sudhir Diwe, managing director of Purti Sugar and Power Limited (PPLS). Sticking to its stance though, Purti has been producing ethanol, he claimed. "Purti has a distillery of its own. But only 30% of the sugar factories have a distillery out of which only half may be having an ethanol plant," he said, adding, "Those without the facility sell molasses to stand-alone distilleries or sugar factories having one. But not many stand-alone distilleries too have ethanol-making facility." Nitin Gadkari, who is among the promoters of Purti Group, has been strongly advocating the use of ethanol in petrol saying that it can save a sizeable amount of foreign exchange by cutting down crude imports. An officer of the rank of director (marketing) in one of the oil PSUs told TOI on the condition of anonymity that the petroleum sector is getting only 30% of the required ethanol. Hence only 2% blending can be achieved as against the targeted 5%. He refused to comment on the pricing issue saying that oil companies follow fix pattern of inviting tenders. On the possibility on the retail price of petrol going down due to blending, he said the direct impact cannot be as big. This is because petrol makes a small part of the total petroleum products. But certainly increasing the blending can increase the quantum of surplus petrol with India. "The country is already a net exporter of petrol, and the quantum can be increased," he said. Gagan Dixit, a petrol sector analyst from M/s Quant Broking, said ethanol can indeed help in reducing the price if blended in higher quantities but the pricing issue should be addressed. A source in the sugar industry said rates have to be above Rs40 a litre to make ethanol making feasible. *Oil companies have purchased only 39 crore litres of ethanol as against bids invited for 140 crore *Oil companies say there is a low supply but sugar millers say this is due to low prices offered *The current rate is Rs39 a litre but sugar sector wants over Rs40 a litre *Union minister Nitin Gadkari, one of the promoters of Purti Group, has been championing ethanol blending saying it can save foreign exchange *As per rough estimates by Purti, if the entire 140 crore litres had been procured it could have replaced petrol worth around Rs6,300 crore *An oil company source said blending can leave a higher exportable surplus of petrol with India