NEW DELHI: Weeks after Bihar banned sale of liquor, the Centre has asked state-owned fuel retailers to buy as much ethanol as they can from distilleries in the state for mixing in petrol.
Bihar, which in early April banned sale of liquor in the state, had asked the Oil Ministry to explore if Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) can lift the entire ethanol produced by the distilleries in Bihar.
The Ministry discussed the Bihar government request with the oil marketing companies and asked them to maximise procurement of ethanol from the state, official sources said.
According to oil companies, about 6 crore litres of ethanol may be produced in Bihar through sugarcane molasses.
The oil firms will strive to absorb this ethanol for their programme to mix sugarcane extracted ethanol in petrol, to help Bihar, they said adding the move was likely to give about Rs 300 crore to farmers of the state through sugar mills / distilleries.
This will also ensure proper utilisation of molasses in the state.
As part of its plan to cut dependence on import to meet oil needs, the government is promoting use of alternate renewable sources of energy such as bio-ethanol and bio-diesel.
As much as 5 per cent ethanol is doped in petrol that is sold in 21 states and four Union Territories, sources said adding the plan is to raise the blending to 10 per cent.
The programme to mix ethanol extracted from sugarcane molasses was started in 2003 with a view to cut India’s dependent on imports to meet its oil needs as well as provide remunerative price to sugarcane farmers but not enough supplies was available all these years.
Against the requirement of minimum 120 crore litre of ethanol for meeting the mandatory 5 per cent blending, only 30.6 crore litre was doped in 2011-12 which dropped to 15.4 crore litre in the following year.
During the sugar year 2013-14, only 38 crore litres of ethanol was available for blending with petrol as against the requirement of 120 crore litres that year.
The NDA government after coming to power in 2014 decided to raise the price at which ethanol will be procured to Rs 48.5-49.5 per litre. This resulted in 67.42 crore litres of ethanol coming in during 2014-15 sugar year (October 2014 to September 2015).
In the sugar year 2015-16, the government is hopeful of exceeding the 5 per cent target, sources said.
Oil firms have floated tender for buying 266 crore litres of ethanol procurement with a view to meet 10 per cent blending target, they said adding more than 135 crore litres has been offered for the current sugar year.
India consumes 2,800 crore litre of petrol and to meet 5 per cent blending would need 140 crore litre of ethanol.