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It’s Time To Celebrate For Ethanol Manufacturers


After a long wait, the change in Petroleum Ministry chair has brought a good news to celebrate for ethanol manufacturers in India. It is said that the center would shortly issue a notification making ethanol blending mandatory from October 2006. The new norms would apply to both public sector as well as private sector players. Initially a 5% blend would be allowed and implemented successfully & this would be increased to 10% by October 2007.

We believe, only resolution would not solve the objective, but a close micro-level monitoring & closing of all escape routes for not blending ethanol by oil corporations should be checked. A tax incentive to the program at this stage would definitely “make the oil corporations blend ethanol out of goodwill”.

Secondly it is seen that price disputes between ethanol suppliers and oil corporations remain the core problem area. Meetings are being conducted between ISMA (Indian Sugar Mill Association) and Ethanol Manufacturers Association officials to derive certain formula for price fixing. As current prices of ethanol offered by oil corporations is Rs. 18.75 is very less as the process of Special Denaturant Spirit (94.68% alcohol) is fetching a price around Rs. 21.00 to 21.50 (May 2006) itself. Hence the sugar factories are more happy to sell 94.68 % alcohol (SDS) than to convert it to ethanol and sell it at a lower price.

The ethanol manufacturers should come out with a parameter and memorandum to establish and assure an uninterrupted supply (lot work to do).

At the current situation the Northern part of India has stated blending not in full fledged. But Maharashtra, Goa, Gujarat & the southern states of Andhra Pradesh, Tamil Nadu are yet to restart full fledge. Only one manufacturer XL Telecom ltd (Ethanol Division) has courageously come forward to supply at the rate of Rs. 18.75.

On the other hand India has a lot potential for flexible fuel vehicles. As it is shows that by 2010 it is estimated that India will have 36 times more cars than it did in 1990. (Watch out China! USA?).

While some news has emerged of Indian companies in Private sector to develop ethanol in large scale plants from non-molasses routes in rural parts of India.

Reliance Industries Limited is planning to set up an ethanol extraction plant at Kurkumbh. Farmers should celebrate as then can afford to give a sound rate to their sugarcane. The ethanol manufacturers should not worry as ethanol they proposed to produce will be consumed for their mono-ethylene glycol unit itself & will not be using for petrol blending.

(Get in touch with Business Brains for exact statistics of future demand and supply.)

To conclude , it’s bright future for ethanol & the black period is over. Only request to the government is to be fixed with the resolution of making ethanol mandatory & monitor the successful running of the ethanol programme.

Your comments & suggestions are welcome. You can interact with Mr. Deepak Desai on email - and Cell No. +91 0 98231 39883.

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