Can India Follow Brazil ?
Findings & Observations of Mr.
Deepak Desai on his visit to Brazil:
The Ministry of Petroleum & Natural Gas
announced its decision to cover all the states in the country
except north-eastern states for 5% ethanol blending from 1st
October, 2006 & now have revised it to 1st
In pursuance of the above there were
lot of discussions & meetings between Oil Marketing Companies,
ISMA (Indian Sugar Mill Association), NFCSF & All India Ethanol
Manufacturing Association in terms of fixation of the price of
ethanol. As there was no unanimous decision on both the parties,
the matter was therefore taken up to the Secretary, Ministry of
Petroleum for settlement.
With October 2006 approaching fast (now
converted to 1st November 2006), in normal
circumstances all issues relating to countrywide doping of
ethanol at 5% should have being settled but still there is an
ambiguity. What should be the price of ethanol? How the entire
model will work?
The Cabinet Minister Mr. Murli Deora
advised the oil Companies to float tenders instead of having a
price negotiations, which was the same old usual process which
was followed by the oil companies previously. So nothing new in
it! But still the question remains what should be the price of
ethanol? How the entire model will work?
I am giving my observations on my study
tour to Brazil to explore the exact model of working implemented
on the other side of hemisphere supported with few photographs.
It was obvious that the same problem
had been faced by the Brazilians as India is facing now. How did
they solve this? I had in mind that for a complicated problem if
the answer is not simple; the cause of the problems remains as
Over the past three decades Brazil has
worked to create a viable alternative to gasoline. With its
sugarcane based fuel; the nation may become energy
independent this year. It started in 1970’s in response to
the uncertainties of the oil market, till now they have ensured
a remarkable success.
70% of the new cars sold now, the
Brazilians are driving “flexible fuel” cars that run on either
ethanol or gasoline. It allows consumers to fill whichever is
cheaper and off course ethanol is cheaper. Name any car
company they are producing flexi fuel cars & hence selling it.
Secondly on all the 30,000 petrol pumps
in Brazil the fuel issued is -
1st - Pure alcohol (95%
purity) – ethanol
2nd – Gasoline with 25%
ethanol mandatory by law
3rd – Gasoline with 25% of
ethanol + additives (octane boosters)
Current prices -
1. Pure alcohol (95% purity) –
ethanol = 1.35 R$ = 29.70 RS.
2. Gasoline with 25% ethanol mandatory
by law = 2.46 R$ = 54.12 RS.
3. Gasoline with 25% of ethanol +
additives (octane boosters)= 2.56 R$ = 56.32 RS.
This reflects the success of the
The program in Brazil started as a
revolution. The military & civilian leaders laid the groundwork
by mandating ethanol use & dictating production levels. Work was
going on all levels. The ethanol producers were forced to invest
on technologies which have ultimately lower conversion costs.
The government supported the sugar industry in giving subsidies
to manufacture & to become more efficient in making the cost of
ethanol low. With this government support sugar companies & auto
makers local units delivered cost saving breakthroughs.
“Flexible fuel” cars running on ethanol, gasoline or mixture of
both have become a hit. Car buyer no longer have to worry about
the fluctuating prices. They fill there vehicles according to
their cost benefit analysis. Yes alcohol gives an average 9 to
10 KM/liter where petrol gives 12 KM/Liter. The consumer chooses
as per his choice. This is the simple answer to which India
should follow. Let the question of calorific value be decided by
consumer & not oil marketing companies.
The oil companies should decide on the
percentage of blend. The ethanol manufacturers should adopt low
conversion cost technologies & provide alcohol. The consumers
should decide on the mix. The Ministry like the Brazils Military
leader Gen. Ernesto Geisel which ordered 10% ethanol blend
mandatory & later 25% in next five years, which allowed Brazil
to pay for fuel in local currency in the form of payments to
The Government gave sugar companies
cut-rate loans to build ethanol plants & guaranteed prices for
there product. So I think everyone should play there respective
role effectively without intermixing the issues to make the
program a success in India.
Observations of Deepak Desai on
Brazilian trip on date 14th August to 23rd
Your comments & suggestions are
welcome. You can interact with Mr. Deepak Desai on email - firstname.lastname@example.org
and Cell No. +91 (0) 9823139883.
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