Nearly five years after a Group of Ministers recommended a mandatory 10 per cent blending of ethanol in petrol as vehicle fuel,the implementation of the idea remains in the doldrums. Reason: none of the ministries consulted agrees with the Ministry of New and Renewable Energys proposal regarding ethanol-blended petrol (EBP). The most vociferous opposition has come from the Planning Commission and the Department of Chemicals who have rejected mandatory blending,and supported the view of the PMs Economic Advisory Council (PMEAC) that given the fickle supply of the biofuel,blending should be kept optional. PMEAC had said the percentage of ethanol blended and its procurement price should be left to market forces so as not to help one sector at anothers cost. This would allow the oil marketing companies (OMCs) to achieve targets in line with the availability of ethanol,it argued. The proposal was listed to be taken up by the Cabinet Committee on Economic Affairs (CCEA) at its meeting on Friday,but was deferred,sources said. While backing mandatory blending,the renewable energy ministry had asked the CCEA to choose between the pricing proposed by the Saumitra Chaudhuri Committee and leaving it to market forces. The Chaudhuri panel had recommended last year that ethanol should be fixed at Rs 27 per litre with a floor of Rs 23 and a ceiling of Rs 31,with the provision of a review by an inter-ministerial group in the event of a breach of the price band in two successive quarters. In the note put up for CCEAs approval,the Planning Commission said it supported PMEAC so that the agricultural producer gets the best possible price for the produce. The Department of Chemicals argued that making EBP mandatory would hurt the chemicals industry by diverting its share of ethanol to the OMCs. It said that 5 per cent EBP would require 105 crore litres of ethanol annually,even though the OMCs could procure only 36 crore litres last year. The Department of Agriculture & Cooperation supported mandatory blending,but objected to fixing a price band for ethanol. It backed market-based free pricing of the biofuel,a concept ingrained in the PMEAC report. The Department of Food & Public Distribution,on the other hand,agreed to a floor-and-cap system,but wanted that the floor price should not be below Rs 27 per litre. It also sought fixing of the price for one year at a time,rather than quarterly. The petroleum ministry,the only one to accept Chaudhuri panels recommendation,wants to keep away from future pricing of ethanol a politically sensitive issue,with key UPA ministers pushing for a higher price for ethanol so as to improve earnings for the sugar industry. The ministry has expressed disagreement with the proposal that it should pilot issues of ethanol pricing in future. Petroleum was the first to seek mandatory EBP which was approved by the CCEA in October 2007 as a measure to reduce the fuel import bill and lower Indias dependence on fossil fuel. With the EBP programme struggling to get off the ground,however,the CCEA in November 2009 directed that a financial penalty be imposed on OMCs for their failure to reach targets. In August 2010,the CCEA was forced to set up the Chaudhuri Committee to determine ethanol pricing after a Committee of Secretaries (CoS) failed to resolve differences. The Department of Chemicals was kept out of the CoS,even though the chemicals industry is a major consumer of ethanol.
