Sunday, March 2, 2008
UPA Government Is Serious On Ethanol Now
The World Environment Day, 5th June 2007 will be remembered as the most “happening” day in the history of ethanol manufacturers in India. It was all sweet news in the week. It started by the visit of Honorable President of Brazil Luiz Inacio Lula da Silva in New Delhi. His meet with Honorable Prime Minister Dr. Manmohan Singh concerted focus on trade, economy and strategic partnership & ethanol and its development was one of the hallmark of the summit.
Sooner the UPA government also through Ministry of Petroleum and Natural Gas showed their serious intentions, “Rededicating towards ensuring a greener future”. The UPA government has taken a number of initiatives as a commitment towards the nation and common man in which environmental friendly ethanol blending program was prime on the list. Thanks to the visionary Leaders, Ms. Sonia Gandhi, Prime Minister Dr. Manmohan Singh, Deputy Chairman - Planning Commission Dr. Montek Singh, Agricultural Minister Mr. Sharad Pawar & Finance Minister Mr. P. Chidambaram. They all have shown that they crystallized policies when it comes to the security of common man.
10% blending from October 2008: The Government is serious of considering 5% doping mandatory with immediate effect & are willing to increase it to 10% from October 2008. This decision will be directly benefiting the sugar cane producing states like Uttar Pradesh, Maharashtra, Karnataka, Tamil Nadu, Andhra Pradesh, Gujrat & Bihar. As all these states are facing a serious problem of excess sugarcane cultivation for the current year and also could face the same in future too.
Ethanol from directly sugarcane juice was the only solution left with them. We are proud that our website www.ethanolindia.net has published an article six months before which the government has taken note.
Hard Road Ahead: The policy is now clear but still the question of “comfort zone of Oil Marketing Company” is important. The ethanol producers should concentrate on the technologies by bringing the cost of production at lower end & here Brazil’s input is important. I strongly believe that Indian Technology Providers like PRAJ Industries Ltd., Alfa Laval (India) Ltd, & others are quite superior. PRAJ Industries Ltd has embarked his name in Latin America too.
The Indian Sugar Mills and the private stand-alone ethanol manufacturers should cut the cost of production by using good technologies requiring less utilities like steam, water and electricity and they should also concentrate on co-generation through effluent generated by “Sugarcane Juice & Molasses Route”. The lower cost of production can still bring the ethanol prices down from the current Rs. 21.50 per liter. Suppliers from Maharashtra are supplying at Rs. 19.50 per liter. The Oil Marketing Companies should appreciate this & support them. The ethanol suppliers should now focus on producing large quantum as this could drop the production cost creating a Win-Win Situation.
Brazilian Inputs: Indian ethanol technology is at par with Brazilians. We need to take only the methodology; specifically the Oil Marketing Companies should understand the economics of blending & frame a system which suits their petrol pricing mechanism & then they can bridge with the ethanol pricing mechanism. I further say one step ahead that they should add their own margin on ethanol as they do currently with petrol refining and marketing. I still believe that the price would be much cheaper. The finance ministry has a definite role to play here.
As adding margins to ethanol from Oil Marketing Companies will also keep their interest in blending apart from the pressure of mandate.
The current period can be called as “a turn around period” for sweet future for ethanol manufacturers.