The alcohol-based chemical industry, representing companies such as Jubilant Organosys and India Glycols, among others, believes the recent Cabinet decision to continue the order on five per cent mandatory ethanol blending with petrol is not realistic.
Indian Chemical Council (ICC), the apex body of domestic chemical manufacturers, is planning to represent to the Department of Chemicals and ministries concerned.
“We are not against blending of ethanol. But we have been manufacturing alcohol-based chemicals since long and huge investments have gone into setting up such facilities. We should, therefore, be given priority along with blending,” said S N Singh, president, ICC and executive director, Jubilant Organosys.
Domestic sugar output fell from 26.3 million tonnes in 2007-08 to 14.7 million tonnes in 2008-09. The dip has resulted in a significant decline in availability of molasses, the raw material for alcohol. The availability of alcohol is estimated to have declined from 2,200 million litres to 1,300 million litres in the same period. The sugar output and alcohol availability in 2009-10 is expected to be in a similar range as last year.
The two primary consumers of molasses-based alcohol are the potable liquor sector and chemical producers. In 2008-09, the potable sector consumed 1,000 million litres of alcohol, while only 300 million litres was left for other uses. The demand from the chemical sector is estimated at 1,000 million litres, while five per cent blending requires 680 million litres alcohol.
“The demand from the potable sector is increasing every year and every state government ensures this demand is met, since it is the largest revenue source for them. This, along with the fluctuating sugar output, will continue to affect ethanol blending,” Singh said.
“The claim being made by the sugar industry on ethanol availability is misleading. Even when sugar production was at its peak, the industry did not meet its commitment. So, where is the question of ethanol being available in a deficit year?” asked Rakesh Bhartia, chief executive officer, India Glycols.
Sugar industry officials, however, say they can well meet the 680 million litres ethanol requirement to meet the five per cent blending requirement.
Singh said the decline in alcohol availability has forced alcohol-based chemical units to operate at 50 per cent capacity and meet most requirements through imports. He also said ICC will request the Department of Chemicals to consider initiating a proposal to bring down the import duty on denatured alcohol from 7.5 per cent to nil. Estimates show 350 million litres of alcohol were imported last year.
