The Hindu Business Line : States urged to help smooth run of ethanol-blended petrol plan

The Petroleum Minister, Mr Murli Deora, has urged the State Governments to facilitate smooth implementation of the ethanol-blended petrol (EBP) programme in the country. Expressing concern over the fact that some States such as Karnataka, Maharashtra and Haryana are levying high taxes on ethanol, besides levying import and export `pass fee', which is hampering the inter-State movement of ethanol and making its cost prohibitive, the Minister said this would adversely affect the smooth implementation of the programme.

"Unfortunately, despite the clear legal position that ethanol falls within the jurisdiction of the Central Government, some States contrary to the Central Government's policy of blending petrol with ethanol, have imposed restrictions on its supply and have also levied various taxes thereby hampering implementation of this programme," the Minister observed.

In a letter to the State Governments, the Minister has said that his Ministry was concerned about the issue and requested the States to extend their cooperation in implementing the EBP programme by not putting any procedural restrictions on the industrial alcohol/ethanol, its production, sale and distribution meant for blending. Mr Deora also asked the States not to levy an imposts excise, entry tax, export or import fee or any other kind of levy which does not fall within their jurisdiction on ethanol meant for blending with petrol.

The Minister also urged the States to create a transparent and well-defined mechanism against the possibility of excise duty evasion and misuse or diversion of rectified spirit meant for ethanol blending in petrol for portable purpose. Such a mechanism should not, however, pose any impediment in the production, sale and distribution of ethanol for blending in petrol, he said.

The Petroleum Ministry in September 2002 allowed doping of petrol with a specified quantity of anhydrous ethanol for supply in specified States. This policy was adopted by the Government to give a boost to the agriculture sector, reduce environmental pollution and also progressively reduce dependence on imported fossil fuel.

However, the programme faced problems on account of high prices of ethanol and its erratic supply. In 2004 October, the Ministry issued fresh notification providing that 5 per cent EBP, meeting BIS standards, shall be sold in 10 notified States and three Union Territories.

However, the oil companies as well as the ethanol suppliers brought to the notice of the Ministry that some State Governments were levying high taxes on ethanol besides levying import and export pass fee. The 10 notified States are Tamil Nadu, Karnataka, Andhra Pradesh, Goa, Maharashtra, Gujarat, Uttar Pradesh, Haryana, Punjab, and Uttranchal.

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