India's Ministry of Oil in favor of biofuel imports, ties with Brazil
In a bid to arm-twist local suppliers of ethanol, India's petroleum ministry is pushing for allowing imports of ethanol, reversing the earlier policy of relying on local production. It is also in favour of allowing imports of biodiesel.
The announcement comes at a time when both the Indian Oil Corporation (IOC) - the largest marketer of petroleum products in the country - and government-owned refiner and marketer Bharat Petroleum Corporation Ltd showed interest to tie up with Brazilian oil major Petrobras to collaborate on ethanol projects, including ethanol imports. Both companies have been asked to explore opportunities in Brazil for the creation of distilleries.
Last year, at the IBSA Summit, Brazil and India signed a biofuel pact allowing the Asian country to invest in its Latin American partner (earlier post). Part of the pact was a bilateral agreement about land sales and leases, which offers Indian producers very favorable conditions for the establishment of energy plantations in Brazil (earlier post).
"Imports may be allowed in the consumer interest to ensure that sufficient quantities are procured at economic rates, and prices of petrol and diesel do not become captive to domestic price spikes in respect of ethanol and biodiesel", the petroleum ministry has said in a Cabinet note.
India's ethanol-blending programme, which was to be rolled out in the country from November 2006 onwards, has been a non-starter, with just about 10 states freezing contracts with ethanol suppliers.
The main issue of contention is the price. This is despite the fact that at a time consensus on the price of ethanol seemed to be emerging between oil firms and the Indian Sugar Mills Association.
Ethanol suppliers in the country are asking for minimum prices of 26-27 rupiah (US$0.59-0.62) per litre of ethanol, while the oil companies are working on an all-India reference price of 21.50 rupiah (US$0.49) per litre.
Imports of biofuels would secure supplies to the Indian market, but dilute the bargaining power of local producers:
bioenergy :: biofuels :: energy :: sustainability :: ethanol :: biodiesel :: trade :: Brazil :: India ::
"There have been instances in the past when domestic ethanol suppliers have diverted supply to other users when prices of ethanol had increased. The did this in spite of a penalty that they have to pay if they breach supply commitments. We do not want such situations," a petroleum ministry official said.
The sugar industry says at 5 per cent blending, the country would require 682 million litres of ethanol in 2006-07, and the demand could rise to 1.3 billion litres with 10 per cent blending. According to industry estimates, India currently has about 120 ethanol-producing distilleries, which can manufacture 1.2 billion litres of ethanol every year.
Interestingly, the Ministry of New and Renewable Energy, which has drafted the biofuel policy, has said in the same note that the primary thrust of the biofuel policy remains indigenous production.
The announcement comes at a time when both the Indian Oil Corporation (IOC) - the largest marketer of petroleum products in the country - and government-owned refiner and marketer Bharat Petroleum Corporation Ltd showed interest to tie up with Brazilian oil major Petrobras to collaborate on ethanol projects, including ethanol imports. Both companies have been asked to explore opportunities in Brazil for the creation of distilleries.
Last year, at the IBSA Summit, Brazil and India signed a biofuel pact allowing the Asian country to invest in its Latin American partner (earlier post). Part of the pact was a bilateral agreement about land sales and leases, which offers Indian producers very favorable conditions for the establishment of energy plantations in Brazil (earlier post).
"Imports may be allowed in the consumer interest to ensure that sufficient quantities are procured at economic rates, and prices of petrol and diesel do not become captive to domestic price spikes in respect of ethanol and biodiesel", the petroleum ministry has said in a Cabinet note.
India's ethanol-blending programme, which was to be rolled out in the country from November 2006 onwards, has been a non-starter, with just about 10 states freezing contracts with ethanol suppliers.
The main issue of contention is the price. This is despite the fact that at a time consensus on the price of ethanol seemed to be emerging between oil firms and the Indian Sugar Mills Association.
Ethanol suppliers in the country are asking for minimum prices of 26-27 rupiah (US$0.59-0.62) per litre of ethanol, while the oil companies are working on an all-India reference price of 21.50 rupiah (US$0.49) per litre.
Imports of biofuels would secure supplies to the Indian market, but dilute the bargaining power of local producers:
bioenergy :: biofuels :: energy :: sustainability :: ethanol :: biodiesel :: trade :: Brazil :: India ::
"There have been instances in the past when domestic ethanol suppliers have diverted supply to other users when prices of ethanol had increased. The did this in spite of a penalty that they have to pay if they breach supply commitments. We do not want such situations," a petroleum ministry official said.
The sugar industry says at 5 per cent blending, the country would require 682 million litres of ethanol in 2006-07, and the demand could rise to 1.3 billion litres with 10 per cent blending. According to industry estimates, India currently has about 120 ethanol-producing distilleries, which can manufacture 1.2 billion litres of ethanol every year.
Interestingly, the Ministry of New and Renewable Energy, which has drafted the biofuel policy, has said in the same note that the primary thrust of the biofuel policy remains indigenous production.
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