Policy and not product availability is proving a hindrance for the ethanol blended fuel programme of the Government.

To achieve the target of 5 per cent ethanol blending with petrol, it is estimated that 115 crore litres (cl) of ethanol is required, but mills have so far supplied around 80 cl.

Unless State Governments relinquished their control of molasses for the production of ethanol, the manufacturers will continue to be conservative when participating in the tenders floated by the public sector oil marketing companies.

Supply uncertainty “The issue is the uncertainty of ethanol supply due to the control of molasses, which is a State subject. If a molasses permit is not given on time, it makes it difficult for the supplier to fulfil the tender on time.

“The fact is molasses is not decontrolled and it’s not free to be used for ethanol production on a required basis,” said Ajit Shriram, Joint Managing Director, DCM Shriram Ltd.

Shriram stated that much harmonisation had taken place between oil marketing companies (OMCs) and ethanol suppliers over the last two years.

The depot price of ₹48.50-49.50/litre was also adequate but hoped that molasses going into ethanol production should be exempt from excise duty. “Tenders must be filled on time or there are penalties. Molasses to be used for ethanol should be freed by States. With even a 5 per cent blend, the country saves $8.5 million in foreign exchange,” he added.

Excise duty waiver Last month, the Centre had waived the 12.36 per cent excise duty on ethanol to provide sugar mills with an additional ₹5/litre from their sales to OMCs.

Actual realisation, industry contends, is closer to ₹2/litre.

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