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R. Balaji

CHENNAI, April 2

THE oil companies are likely to come out with a second tender next week calling for anhydrous alcohol supply to commence the gasohol programme in Tamil Nadu, Andhra Pradesh and Karnataka, according to oil company sources.

According to the sources, the tender will be for one-year supply of anhydrous ethanol to commence the sales of ethanol-blended fuel, gasohol, in these States. The oil companies hope to meet the deadline fixed by the Centre for them to commence supply of gasohol by June 30. Suppliers are expected to make available anhydrous ethanol by June 1 to the oil companies.

However, the distillery units in Tamil Nadu, most of them attached to the sugar mills, are in no position to commence production of anhydrous ethanol. The State Government is yet to endorse the distilleries' licenses to commence anhydrous ethanol production. But it had, in principle, given the go ahead to six distilleries to commence anhydrous ethanol production and had passed appropriate orders last year, sources said.

In Karnataka, sufficient capacities are in place to make available anhydrous ethanol to meet the requirement of about 4,000 kilolitres per month. In Andhra Pradesh, where an equal quantity is needed, only a part of the requirement is likely to be met. In Tamil Nadu the requirement is about 5,000 kilolitres per month, but the production facilities are yet to be put in place, sources said.

The coming tender will be aimed at sourcing the required ethanol for the next one year. If the manufacturers are not able to stick to the schedule, they could lose out on exploiting this source of revenue. The sugar mills, which have been faced with a financial crunch following low sugar prices, were looking forward to this new revenue stream. However, for reasons that are yet to be clarified by either the sugar industry or the State Government, the project is yet to become a reality in Tamil Nadu despite the available potential and the obvious benefits, they said.

For instance, when the Centre had proposed to commence anhydrous ethanol supply throughout the country from January 1, the industry and the State Government authorities had welcomed the move. Six distillery units in Tamil Nadu invested around Rs 2-3 crore each to set up additional facilities in their existing distillery units to produce anhydrous ethanol. The Government had approved the move and was expected to endorse their licences.

However, due to the delay in giving the go ahead, the units could not participate in the first tender called by the oil companies last year. That tender was for a limited period of about three months to enable the distilleries to set up facilities and be ready to meet a second deadline this year. But now, four months down the line, the situation is unchanged, sources said.

At the recent inauguration of an oil company's jetty in Nagapattinam, the Petroleum Minister, Mr Ram Naik, had been critical about the situation in Tamil Nadu. Subsequently, the oil companies had called for a meeting with the industry to get an update and decided to hold fortnightly meetings to keep track of the progress.

But clarity is yet to emerge on this issue. They are at a loss to understand the situation and have decided to go ahead with the tender.

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