Petroleum Companies Get Good Response to Ethanol Procurement Tender

(PTI/New Indian Express) The EOI was published by Bharat Petroleum on behalf of oil marketing companies on August 27, and it opened on September 17. -- State-owned fuel retailing firms have received an "overwhelming" response to the tender they floated for buying ethanol for mixing in petrol, a government statement said on Saturday.

"The first Expression of Interest (EOI) for signing long-term agreement with upcoming dedicated ethanol plants for supply of ethanol has received an overwhelming response, with 197 bidders participating in the same," it said without giving details of the quantity ethanol manufacturers have committed to supply.

The EOI was published by Bharat Petroleum Corp Ltd (BPCL) on behalf of oil marketing companies on August 27, and it opened on September 17. "The bids are currently under evaluation," it said. The oil companies floated the tender to buy ethanol for progressively raising the percentage of ethanol mixed in petrol to 20 per cent (80 per cent petrol, 20 per cent ethanol). READ MORE

Excerpt from Times of India: India imports about 82% of the crude oil required to make petrol and diesel. One of the main contributors to hikes in fuel prices is the international price of crude oil, besides the burden of local taxes.

Without a policy for import substitution, not only will the fuel prices in India be determined by the international prices, the consumption of petrol/diesel produced from crude oil will also increase, giving room for higher levels of greenhouse gas emissions.

Recently, the Hon’ble Prime Minister had announced that India would be aiming to achieve 20% ethanol-blending with petrol by 2025 (also known as E-20 Fuel). Ethanol is a bio-fuel obtained primarily from sugarcane and damaged food grains. Encouraging ethanol blending will reduce the country’s import dependence on the one hand, and serve as a cleaner alternative fuel on the other hand.

This article analyses the implications of ethanol blending on the taxes borne by the consumer and the consequent impact on the price of petrol. This Article also analyses the implications of blending from the OMC’s point of view.

As GST on ethanol is much lower than the Excise Duty and VAT paid on petrol, blending 20% ethanol is expected to reduce the final price by 20%. READ MORE