India to delay E10 mandate

The Government of India has deferred its program to introduce the mandatory 10% blending of ethanol (E10) with petrol, slated for enforcement in October. Instead, the latest proposal is for a pilot project study to be undertaken by Indian Oil Corp. (IOC) and other oil marketing companies (OMCs) using E10 petrol in Maharashtra and Uttar Pradesh (UP),” official sources said. A sum of Rs121.9 million (US$2.62 million) has been sought from the Ministry of Heavy Industries and the Oil Industry Development Board (OIDB) for funding these projects. The sources said the decision to defer the mandatory introduction of E10 petrol took into account reservations expressed by auto manufacturers. Their concern is about the compatibility of the present engines with E10. The pilot project aims to conduct studies similar to the ones done with 5% blended fuel, which is currently in use. Other concerns that lead to the delay of the program are rising alcohol prices, as well as the problem of availability. Indias sugar mills have threatened to halt ethanol production due to the OMCs unwillingness to raise the ethanol procurement price. OMCs have argued that mills are bound by the agreement to continue ethanol supply at the mutually agreed price of Rs21.50 (US$0.46) a liter until the end of the three-year contract period of October 2009. Instead of manufacturing ethanol, they prefer to make molasses. India needs around Rs60 crore or 12.9 million liters per year (lpy) of ethanol to meet the current 5% blending norm. (September 12/15, 2008)