Chemicals industry wants end to gasohol use

In a few days from now, the chemicals industry in Maharashtra is confident it will get a certificate from the excise department saying there is no surplus ethanol in the state, thus ensuring that no supplies will be diverted for doping with petrol.

The Indian Chemical Manufacturers' Association (ICMA) met Petroleum Minister Murli Deora to give its side of the story, and gave figures to show the sugar industry was exaggerating supplies in order to show there is a surplus. ICMA fears that if doping catches on, ethanol will be in short supply and prices will shoot up.

For the current year, ICMA alleges that the sugar industry has overstated supplies by about a fourth.

So, while the sugar industry shows a surplus that is enough to meet the proposed purchase of ethanol by the oil marketing companies, ICMA says there's a slight mismatch even without taking into account the demand from the oil marketing companies.

According to ICMA, it is only when sugar production rises to 30 million tonnes from the expected 23 this year that gasohol should be used.

By way of example, it points out that 400 million litres of alcohol were imported in 2004-05 and 300 in 2003-04, a sure sign of the shortage "� just the increase in Reliance's MEG production in the SM Dyechem unit it took over last year will add 180 million litres to this year's demand, the ICMA presentation to Deora points out.

The sugar industry, however, refuses to buy this. According to Ravi Gupta, president, sugar and alcohol for Bajaj Hindusthan, the country's sugar balance sheet has had positive closing stocks of around 2,000 million litres even in years when production fell "� in both 2003-04 and 2004-05, this was done through imports.

"We insist alcohol is surplus," says Gupta, adding that he is exporting this year due to inadequate domestic demand.

"Next year, with sugar production expected to touch 23 million tonnes, India will produce 425 million litres of extra alcohol/ethanol, so where is the deficit?" he asks.

But even if you were to agree with ICMA that there is no extra ethanol, creating extra supplies may not be too difficult if industry and the government agree that the gasohol programme is important enough.

Based on current yields, producing the 0.5 million kilolitres of ethanol required for the gasohol programme requires 0.74 million hectares of land, or just around 0.33 per cent of the country's gross cropped area.

Cane yields in Uttar Pradesh, which account for a third of the country's production, are just 60 tonnes per hectare as compared to 90 in Maharashtra and 110 in Tamil Nadu. Just raising UP's yields to 70 tonnes will increase the country's production by 5 per cent.