News Release Details
Oil cos struggle to meet ethanol blending norm
New Delhi 10-Sep-2007
Even as there is talk of the Centre planning to introduce 10 per cent ethanol-doped petrol on a countrywide basis from October 2008, oil companies are struggling to meet even the existing five per cent blending norm. The three State-owned oil-marketing companies (OMC) had contracted to lift a total 1,176.13 million litres of ethanol from sugar mills over a three-year period from last November. But latest available data till August 15 shows an aggregate procurement of just 84.40 million litres or 7.2 per cent of the total contracted quantity. IndianOil has so far lifted 44.21 million litres (out of its contracted 495.46 million litres), while the corresponding procurement by Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) has been 20.79 million litres (353.03 million litres) and 19.41 million litres (327.64 million litres), respectively. <b>State Levies</b> "There have been hiccups in implementation primarily due to the host of levies imposed by State Governments, making the programme unviable. But now, some of these have been sorted out and we see procurement going up in the next 2-3 months," an oil industry official said. The State levies over and above the 16 per cent Central excise duty and three per cent education cess range from sales tax, central sales tax, denaturation fees, licence fees and export/import fees of inter-State movement.In the recent period, Bihar and Jharkhand have reduced the import fee for ethanol entering their States from Rs 5,000 per kilolitre (kl) to nil, with Delhi (from Rs 4,040 to nil), Haryana (from Rs 5,000 to Rs 1,000), Rajasthan (from Rs 6,000 to Rs 1,000), Madhya Pradesh (from Rs 3,500 to Rs 1,000), and Orissa (from Rs 3,000 to Rs 2,000) also cutting their levies. <b>The Bengal Status</b> As a result, it is expected that by the end of this month, the programme will be fully launched in all States, barring Tamil Nadu and West Bengal. In both these States, the excise departments have not issued allocations for ethanol, fearing shortages of alcohol for potable and industrial purposes. "If implementing even the five per cent blending norm has taken so much time, we wonder how the proposed 10 per cent programme will take off in a year's time. Since alcohol is a cash cow for States, nobody is keen to forego the revenues that the same litre would generate from being converted to liquor and not diverted to ethanol," the official added.
New Delhi 10-Sep-2007
Even as there is talk of the Centre planning to introduce 10 per cent ethanol-doped petrol on a countrywide basis from October 2008, oil companies are struggling to meet even the existing five per cent blending norm. The three State-owned oil-marketing companies (OMC) had contracted to lift a total 1,176.13 million litres of ethanol from sugar mills over a three-year period from last November. But latest available data till August 15 shows an aggregate procurement of just 84.40 million litres or 7.2 per cent of the total contracted quantity. IndianOil has so far lifted 44.21 million litres (out of its contracted 495.46 million litres), while the corresponding procurement by Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) has been 20.79 million litres (353.03 million litres) and 19.41 million litres (327.64 million litres), respectively. <b>State Levies</b> "There have been hiccups in implementation primarily due to the host of levies imposed by State Governments, making the programme unviable. But now, some of these have been sorted out and we see procurement going up in the next 2-3 months," an oil industry official said. The State levies over and above the 16 per cent Central excise duty and three per cent education cess range from sales tax, central sales tax, denaturation fees, licence fees and export/import fees of inter-State movement.In the recent period, Bihar and Jharkhand have reduced the import fee for ethanol entering their States from Rs 5,000 per kilolitre (kl) to nil, with Delhi (from Rs 4,040 to nil), Haryana (from Rs 5,000 to Rs 1,000), Rajasthan (from Rs 6,000 to Rs 1,000), Madhya Pradesh (from Rs 3,500 to Rs 1,000), and Orissa (from Rs 3,000 to Rs 2,000) also cutting their levies. <b>The Bengal Status</b> As a result, it is expected that by the end of this month, the programme will be fully launched in all States, barring Tamil Nadu and West Bengal. In both these States, the excise departments have not issued allocations for ethanol, fearing shortages of alcohol for potable and industrial purposes. "If implementing even the five per cent blending norm has taken so much time, we wonder how the proposed 10 per cent programme will take off in a year's time. Since alcohol is a cash cow for States, nobody is keen to forego the revenues that the same litre would generate from being converted to liquor and not diverted to ethanol," the official added.