The Petroleum Ministry, which has made 5 per cent ethanol blending in petrol mandatory from January 1 this year, has received a request from the country's distillers association which has urged it to allow usage of ethanol made out of sources other than molasses, as the spirits as well as the chemicals sectors too use this variety of alternative fuel and in the long run, its greater usage is likely to affect the requirements of all the sectors.
Official sources that the ministry is open to usage of ethanol made out of elements other than molasses, provided they are non-food items. Sources privy to the development said that the ministry could consider expanding the definition of ethanol which is to be used for mixing in petrol, in future.
The ethanol being used by the petroleum industry is primarily produced from sugarcane molasses - which is also a prime raw material for potable spirit sector and alcohol based chemicals sector. With the Petroleum Ministry planning to increase the ethanol blending percentage to 10 per cent to 15 per cent in future, the distillers have requested it to amend the tender conditions (for ethanol procurement), allowing usage of the alternative fuel made out of grains, cellulostic, lingo cellulostic and any other source.
The All India Distillers' Association recently made this request to the Petroleum Minister M Veerappa Moily, urging him to look at a possibility where tender conditions could be amended to include ethanol produced from the aforementioned sources, other than molasses.
In support of its argument for spacing out usage of molasses-based ethanol for blending purpose in petrol, the association said that the requirement of potable liquor sector for this kind of ethanol is estimated to be around 1,700 to 1,800 million litres annually. Similarly the requirement of the petroleum sector for blending purpose (at 5 per cent level of molasses-based ethanol) stands at around 1,100 to 1,200 million litres. While the chemicals sector requires around 700 to 800 million litres of ethanol.
In total, all the three sectors require around 3,300 to 3,500 million litres of molasses-based ethanol annually. In such a scenario, the association tried to explain to Moily that the requirement of ethanol produced from molasses may not be fulfilled even for 5 per cent blending purposes for the petroleum sector, as the demand of the other two sectors is equally high.
Thus it has requested the minister to consider amending the tender document clauses (for ethanol procurement purposes) in order to include the usage of alternative fuel made out of other sources.
While the Petroleum Ministry is open to this option, oil marketing companies (OMCs) have already floated tenders for procurement of 1,330 million litres of ethanol for blending with petrol for the period ranging from December 2013 to November 2014. Moily had informed the Parliament during the recently concluded Monsoon session that
OMCs would procure ethanol from domestic sources to achieve the mandatory requirement of 5 per cent ethanol blending with petrol by October in areas of the country where sufficient quantity of ethanol is available. In other parts, blending might be increased progressively, depending upon the availability of ethanol to reach the mandatory level. The tender, which is the second one in this calendar year, was floated on July 22, 2013.
Blending of ethanol with petrol would have very little impact on import of crude oil, since petrol is only a by-product of the distillation process and overall blending of ethanol is limited to five per cent, the minister had told the Parliament.
Moily had also added at that time that the procurement price of ethanol would henceforth be decided between OMCs and ethanol suppliers.The first tender was floated in January 2013 for an annual requirement of 1,050 million litres for five per cent blending.