The other day the director general of Indian Sugar Mills Association Abinash Verma made an impassioned plea for the central government to announce the final price of ethanol to be procured by oil marketing companies (OMCs) for blending with petrol.
Till such time the final price is announced, OMCs are to procure ethanol from indigenous sources at a uniform ex-factory ad-hoc price of Rs 27 a litre for its doping with petrol. According to Verma, sugar mills have finalised "contracts with oil marketing companies for supply of about 600 million litres and delivery has begun."
In this particular case, the government is not to be blamed for the unconscionably long time being taken to post ethanol's final price. Over three months ago, the government flagged off the ethanol blended petrol programme (EBPP) across the country as it left it with an expert committee led by planning commission member Saumitra Chaudhury to recommend the final price. The government wanted the final price recommendation "expeditiously." It will be interesting to watch how much weight the committee will give to "parity with gasoline retail price, import parity price of ethanol and underlying cane prices," as suggested by the sugar industry.
India being the world's second largest producer of sugar from cane after Brazil, is expected to use a growing portion of cane by-product molasses for making ethanol. For the world, Brazil stands as the shining example of very largely eliminating greenhouse gas emission by using ethanol either in a blend with petrol or on stand alone basis in its automobile fleet.
Ethanol has a special appeal for India, for its feedstock here unlike in Brazil is only the byproduct molasses. As a result, we are not using farm land or a food crop for making bioenergy. China has a dislike for using corn for making ethanol. It is, therefore, pushing non-staple crops like sorghum, balata and cassava. Both India and China are keenly promoting jatropha, a hardy oil rich seed which can be grown on marginal land. All these crops are good sources of biofuel. Oil accounts for a little over 30 per cent of India's import bill and to the extent there is ethanol doping, money spent on oil imports will be saved.
Brazil and the US between them are responsible for over 85 per cent of the world ethanol production. In Brazil, 25 per cent ethanol doping in gasoline is mandatory, while over 11 million Flex cars on Brazilian roads run entirely on ethanol. India needs catching up.