Bio-fuels policy fails to clear air on ethanol-blended petrol

Has the deadline for blending of 5 per cent ethanol with petrol been deferred? There were no clear answers as details of the draft National Bio-fuels Policy trickled in.

Prepared by the Ministry of New and Renewable Energy, the policy calls for compulsory 5 per cent green fuel blending with auto fuels by 2012.

The Ministry of Petroleum and Natural Gas has already implemented, what was supposed to be a country-wide programme, in Uttar Pradesh, Tamil Nadu and Goa, and partly in Maharashtra. Negotiations with more states are going on.

Pricing issues have delayed the programme on a national scale. The government had set October 2006 for nationwide implementation, but late last month, Petroleum Secretary MS Srinivasan said 25 per cent of the country was being targeted by the end of January 2007.

"The Cabinet needs to dwell long and hard on the draft policy," he said. A government official revealed that ethanol suppliers do not always honour the supply contracts they enter into.

"They would rather face penalties," he said. For example, in 2004, suppliers backed out when the production of ethanol was very low.

"In 2012, the supply of ethanol would be a major problem, since sugarcane acreage is not going to change much from what it is today," the government official said.

Industry sources say that by 2012, the demand for auto fuels will only increase and there will not be enough ethanol available to blend with the required petrol.

"Moreover, green diesel technology is still quite a distance from commercial use," an industry player said.

The only way the situation can change is if ethanol is allowed to be imported. The government, however, is keen to encourage domestic sugarcane growers and ethanol producers.

"And it does not look like that will change," a government official said. The official was worried that the mandatory blending would only expose consumers to higher prices, brought about by the low availability of ethanol.