Over a decade after the government first proposed the blending of ethanol with petrol at 5:95 ratio and even made it mandatory later, less than a third of that modest target is set to be achieved in the current fiscal. This is despite the Centre allowing interested states to adopt a 10% blending target to cut down on pollution.
The ethanol blending limit has been a meagre 1.4% up to February, lower than last year’s level of 2%. While ethanol producers and OMCs have been in an unending blame game, state-level levies on the bio-fuel and the requirement of obtaining permits from authorities have made the matter worse for sugar mills and co-operatives, which are the major producers of ethanol. India needs around 115 crore litres of ethanol to meet the 5% target, barring a few regions, including the N-E states and J&K, where the blending rule isn’t applicable.
Hurt by the levies that reduce producers’ margin, especially when the price of ethanol is fixed by the Centre at Rs 48.50 per litre (for supplies at OMC depot within 100 km), Indian Sugar Mills Association (ISMA) has written to CMs of producing and consuming states, seeking relief.
In a letter to Delhi CM Arvind Kejriwal this month, ISMA director-general Abinash Verma said Delhi imposes levy of Rs 2 per litre for inbound supplies of ethanol, which has discouraged mills from supplying ethanol to meet requirement for even 5% blending limit. Since it needs six crore litres of ethanol a year to achieve the 10% limit, and assuming mills will supply ethanol to meet this level, Delhi will garner only Rs 12 crore from the levies. “(This) you will agree is not enough to sacrifice a green renewable bio-fuel, which has the potential of reducing vehicular pollution in Delhi,” he said. Delhi currently gets around Rs 5 crore on such levies on supply of 2.5 crore litres of ethanol.
Fixed ethanol price hurting suppliers The Centre has stipulated that interested mills have to sell ethanol at Rs 49.50 a litre at the depot of OMCs locating beyond 300 km. Verma says this is a loss-making proposition for mills that have to supply at depots far from distilleries, say over 500 km, thanks to high transportation charges.