The Hindu Business Line : Ethanol-petrol programme yet to take off nationally

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Ethanol-petrol programme yet to take off nationally

Harish Damodaran
Richa Mishra

Finalised only in Uttar Pradesh, Tamil Nadu and Goa

Slippery road
In Maharashtra the process is stuck over pricing.
The programme needs to be in place by the end of this month.

New Delhi , Nov. 19

Despite the Centre's claims of having launched ethanol-blended petrol on a nation-wide scale, the programme has actually taken off in just three States - Uttar Pradesh, Tamil Nadu and Goa.

In the three States, the public sector oil marketing companies have not only contracted ethanol at an ex-distillery price of Rs 21.50 per litre, but have also finalised the logistics of procurement, blending and distribution.

This is not the case elsewhere, where contracts are yet to be concluded.

In Maharashtra, for instance, the process is stuck over pricing, with one party — XL Telecom Ltd — quoting a rate of Rs 19.49 a litre.

This is as against the Rs 24.30 per litre tendered by the other 40 bidders in Maharashtra, who have alleged predatory pricing by the company.

According to them, XL Telecom has only a stand-alone distillery at Nanded that procures rectified spirit and dehydrates it further to ethanol. "In the last tender, this company had quoted for 420 lakh litres, against which it had supplied only 18.18 lakh litres till October. We have told the Petroleum Ministry that prices cannot be fixed based on what a stand-alone distillery that is not attached to any sugar mill has quoted," said an official of Ethanol Manufacturers' Association of India.

Last Wednesday, the Petroleum Ministry convened a meeting to resolve the deadlock, with the Secretary of the association, Mr M.S. Srinivasan, asking oil companies to negotiate a price of Rs 21.50 a litre that was finalised in UP, Tamil Nadu and Goa.

"We would like a higher price since we are selling rectified spirit (containing 95 per cent alcohol, against 99.8 per cent for ethanol) now at Rs 25 a litre. But if they still insist on Rs 21.50, we are willing to consider it, as it would be a firm contract price for three years," the official said.

The Ministry and oil companies are hopeful that the Rs 21.50 per litre rate would eventually become the negotiated rate across the country and the programme will be fully in place by the end of this month.

This is as against the previous two deadlines of November 1 and November 15.

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