Deshmukh firm on ethanol-petrol blending

Chief Minister Vilasrao Deshmukh has expressed his displeasure over the procrastination by petroleum companies on implementing 5 per cent blending of ethanol with petrol.

The chief minister has asked Petroleum Minister Murli Deora to direct petroleum firms to start buying ethanol from sugar cooperatives in Maharashtra at the rate of Rs 21.50 per litre directly as per the Union Cabinet's decision and not through the tendering process.

According to sources close to the development, Deshmukh pointed out to Deora during the meeting at Mantralaya, the state government's headquarters, that the decision asking petroleum companies to buy ethanol at Rs 21.50 directly from the manufacturers was taken by the Union Cabinet on October 7, which was chaired by Prime Minister Manmohan Singh. It is a defiance of the Cabinet decision, he claimed.

Speaking to mediapersons after the meeting, Deshmukh said: "Petroleum companies have floated the tender to purchase ethanol from lowest bidders. Even traders who have nothing to do with ethanol manufacturing are also participating in this tendering process and quoting rates like Rs 16 or Rs 17 per litre."

At a time when the sugar industry is facing a glut, the only way they can survive and offer farmers a remunerative price of their sugarcane is by selling ethanol.

The installed capacity of ethanol manufacturing in Maharashtra is about 800 million litre per year. At 5 per cent blending, around 100 million litre a year, and at 10 per cent 200 million litre can be supplied by factories from the state, he pointed out.

"We have demanded that petroleum companies should fix quota for each factory and indicate the depot where they want delivery. They should directly buy from sugar factories, eliminating the middlemen. However, there were some procedural difficulties and to sort them out, the petroleum ministry will be calling meeting in Delhi next week," the chief minister added.

Speaking to reporters, Deora said at 5 per cent per litre of blending, the petroleum companies will require 1.8 billion litre of ethanol over the next three years. Of this, 1.4 billion litre had been contracted by these companies and nearly 200 million litre had been purchased till December 1, 2007.

He added the Maharashtra government had also assured the Centre to scrap the export levy of Rs 1.50 per litre on ethanol.