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Harish Damodaran
Richa Mishra

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New Delhi, July 13 With less than three months to go for the 10 per cent mandatory ethanol blending in petrol to take effect, the Centre is yet to issue the formal notification directing the oil marketing companies to tie up supplies for meeting the target.

“We are awaiting the notification (from the Petroleum Ministry). Only then can we start floating tenders for procuring the additional quantities of ethanol to meet the 10 per cent norm,” said an oil industry official.

Currently, only five per cent blending of ethanol in petrol is allowed. In the absence of a notification, any sale of E-10, i.e., 10 per cent ethanol-doped petrol, would technically constitute adulteration.

The Cabinet Committee on Economic Affairs (CCEA) had, last year on October 9, approved making 10 per cent blending “optional” from October 2007 and “mandatory” from October 2008 across the country, except in Jammu & Kashmir, the North-East and the Island Territories.

Subsequently, the Bureau of Industrial Standards (BIS) laid down the specifications for E-10 petrol.

The new product was incorporated in the BIS specification of Motor Gasoline (IS-2796), subject to a higher Vapour Lock Index (VLI) of 1,050 for summer months and 1,100 in winter, as against the existing 900-1,050 range for normal petrol.

“Everything is ready. We are only waiting for the oil companies to start the tendering process, which obviously requires some lead time,” a miller said.

The oil companies, in turn, put the onus on the Centre to issue the necessary notification.

Also, a price tender may not be needed now, as the October 9 CCEA meeting had also cleared a uniform purchase price of Rs 21.50 a litre ex-factory for supply of ethanol “for the next three years”.

“As far as we know, the Rs 21.50 rate is a firm contract price valid up to October 2009. The new tender will only be for allocation of the additional ethanol among individual factories/distilleries. Besides, there are concerns over meeting committed supplies at Rs 21.50,” the oil industry official noted.

The sugar mills, however, are not keen to supply at this rate for two reasons. One, they are currently selling rectified spirit (containing 95 per cent alcohol, against the 99.8 per cent for ethanol) at Rs 22-25 a litre. Supplying ethanol at Rs 21.5 a litre would mean fetching lower realisation on a higher-purity product involving extra processing value of Rs 1.25-1.50 a litre. Secondly, they claim that the Rs 21.50 rate is below the present refinery-gate price of around Rs 27.50 for petrol and was fixed when global crude was trading around $65-$ 70 a barrel.

“The arguments regarding ethanol having lesser calorific value or ethanol-doped petrol reducing vehicle mileage have no basis for blending volumes of up to 10 per cent. At least some price parity vis-À-vis petrol is called for,” the miller said.

The annual ethanol requirement for five per cent blending is 560 million litres, which will double in the case of E-10 petrol. Meanwhile, the oil companies are expected to float fresh tenders for purchase of 60-70 million litres in the coming few weeks. This is mainly on account of the ethanol that was not delivered by a few distilleries in Maharashtra, which had bid for as low as Rs 19.50 a litre in the original tender.

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