Raising an alarm over slow ethanol procurement for blending with the petrol, a parliamentary committee has flagged loopholes in the government's Ethanol Blending Programme (EBP).
The EBP, under Ministry of Petroleum and Natural Gas, aims at blending ethanol with petrol, thereby bringing it under the category of biofuels and saving millions of dollars by cutting fuel imports. Savings due to blending of ethanol for the ethanol supply for the year 2015-16 was around $353 million.
In 2016, the government had fixed the target of blending 10 per cent ethanol, however, later shifted the target to 2022.
The blend was, however, only 2.07 per cent in 2016-17 and 3.5 per cent during 2015-16, noted the Parliamentary Standing Committee on Petroleum and Natural Gas.
The committee has now asked the government to make all efforts to intensify the procurement of ethanol, with molasses.
"Ethanol Blended Petrol Programme is being implemented by the Ministry or Oil Marketing Companies (OMCs). During the year 2015-16, the actual quantity procured by the OMC's was 111 crore litres achieving 3.5 per cent blending.
"However, during 2016-17, the total procurement was only 66.5 crore litres, achieving the blending of 2.07 per cent," the 31-member committee said in its 23rd report.
The government attributed low procurement to drought situation in Karnataka and Maharashtra, the sugarcane producing states.
However, the ethanol trading companies believe that ethanol blended mandate has lost its significance in India over last few years.
"The ministry and public-sector OMCs have put all their focus on untested and expensive second-generation ethanol, while not providing sufficient impetus for achieving the blending rate through the cheaper first-generation ethanol," said S.K. Tapuriah, CEO, Avron Chemicals Pvt Ltd, a domestic ethanol trading company.
The Parliamentary committee further pointed out that for the year 2017-18, tenders have been issued for 313 crore litres of Ethanol and so far 3.28 crore litre have been procured.
The government has informed the committee that OMCs are likely to procure close to 140 crore litres in 2018.
"The Committee recommend that the Ministry should make all efforts to intensify the procurement of Ethanol for EBP programme and achieve increasing blending percentage which also help in diversifying energy sources," it said.
For 2016-17, the government had fixed the price of ethanol at Rs 39 per litre, the current price is Rs 43 per litre.
The committee also asked the Ministry and OMCs to "seriously look at establishing Second Generation Ethanol Plants", to diversify its sources and improve the blending percentage in the country.
Earlier in December 2016, total six memorandum of understandings were signed for establishing six second-generation ethanol plants, at an expenditure between Rs 800 to 1,000 crore. One of the primary source of second-generation ethanol is stubble or crop residue, experts say.
Additional Rs 10,000 crore will be spent for establishing 12 second-generation ethanol plants.
India is the third largest consumer of energy in the world after China and the US. Currently, the country is dependent on imports for about 82.1 per cent of its crude oil requirement and to the extent of about 44.4 per cent in case of natural gas.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)