Facing over capacity, distilleries want Government to raise ethanol blending
GEMA says India’s ethanol capacity is a strategic asset, not overcapacity, built on clear policy signals. The EBP was never meant to stop at 20% blending. It urges higher blends, faster flex-fuel vehicles rollout, better infrastructure and tax rationalisation to boost demand, utilise capacity, support farmers, cut fuel imports nationally.
The Grain Ethanol Manufacturers’ Association (GEMA) on Wednesday said that the current Ethanol Blending with Petrol (EBP) programme was never intended to stop at 20 per cent, and urged the government to allow higher blending, among other measures to raise domestic demand amid large capacities of distilleries not able to utilise their potential.
The capacity exists, investment is already made and it is time the policy must unlock consumption, GEMA said suggesting a host of measures for the government as an inter-ministerial committee is believed to have finalised its recommendations with regard to the EBP programme.
Accelerated rollout of Flex-Fuel Vehicles (FFVs), rapid development of ethanol dispensing infrastructure and rationalisation of GST/VAT on ethanol can help India save up to ₹2 lakh crore annually in foreign exchange out of an estimated ₹22 lakh crore spent on fuel import.
“Ethanol capacity was created in response to a clear national mandate. The need of the hour is to expand demand, not contract capacity, so that the full economic, rural and environmental benefits of the programme can be realised,” said C K Jain, president of GEMA.
Currently, the annual capacity of grain-based ethanol distilleries is about 1,000 crore litres, whereas the oil marketing companies (OMCs) have allocated them 760 crore litres (or over 72 per cent) out of total 1048 crore litres of ethanol they wanted to buy in current ethanol supply year that began November 1. Grain-based distilleries are said to have offered to supply over 1300 crore litres of ethanol to OMCs.
GEMA said that India’s ethanol manufacturing capacity, often described as “over capacity”, is in fact a strategic national asset created through clear policy direction and long-term planning. The current situation is not the result of speculative investment, but a direct outcome of strong policy signals and a future-oriented programme led by the government.
However, many experts said that when everything is regulated, from raw material to price to marketing, distilleries could have been more circumspect before putting their money in ethanol.
The EBP was envisaged as a checkpoint to assess feedstock availability, investor capability, rural impact and system readiness, the industry body said.
“In line with consistent policy signals, industry invested ahead of demand to build long-term capacity. India’s roadmap has repeatedly pointed towards higher ethanol blends, the adoption of FFVs and global benchmarks such as the Brazil model,” GEMA said stressing that investments were made in alignment with this long-term direction rather than short-term procurement cycles.
It also said that in Brazil the EBP has reached 55 per cent of petrol consumption.
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Source : The Hindu Business line
