NEW DELHI, Nov. 2 (UPI) -- India Thursday launched a nationwide ethanol-blending program in its largest populated state, Uttar Pradesh.
"Ethanol is already being delivered to the depots of oil marketing companies in the state. It should be at the retail outlets by Friday," said the Indian Oil Corp., the country's major oil marketing firm, in a statement.
Other provinces are in various stages of negotiations to start blending 5 percent ethanol in gasoline, with the southern state of Tamil Nadu next in line, The Business Standard newspaper reported Thursday.
The procurement price for both states has been fixed at less than 95 cents per 0.26 gallons of ethanol, the benchmark of negotiations in other provinces.
Oil marketing companies have been paying about 76 cents per 0.26 gallons so far in the nine states that opted for ethanol blending last year.
The final price for oil marketing companies is likely to be anywhere between about 91 cents to $1.10 per 0.26 gallons, with the addition of transport charges, excise duty (16 percent), tax on inter-state movements and import and export levies imposed by state governments.
While the oil companies have said the exercise would be revenue neutral because the landed cost of ethanol was about the same as the landed cost of petrol, other ethanol users will be hit hard.
At 5 percent blending, the annual ethanol demand is estimated at about 580 million liters, less than half the installed capacity of 1,300 million liters.
Industry observers say there is unlikely to be a supply constraint at any point of the sugar-to-ethanol program -- 10 percent blending starting next October. User industries, like the chemical industry, are not worried about a second round of price escalation, but about possible alcohol shortages.
