UAE’s Gulf Petrochem announced plans to build an ethanol plant in India to leverage the government’s 5% ethanol blending mandate. The government is said to be considering further raising the ethanol mandate in petrol to 10%.
Gulf Petrochem, which is invested in oil trading, refining and bunkering, said it plans to construct a 60,000-kilolitre ethanol facility by the 2017-2018 timeframe.
According to estimates, India needs more than 115 crore litres of ethanol to meet its 5% blending target but so far, local ethanol producers are only able to supply 80 crore litres. Ethanol producers, who mostly use molasses as feedstock to produce fuel-grade ethanol, said state levies and the government-mandated price of INR 48.50 (USD0.77)per litre are deterring investments in the sector. The Central Board of Excise and Customs (CBEC) has recently announced that it will lift the 12.36% duty on ethanol produced from molasses after 1 October 2015.
Gulf Petrochem, however, is looking at producing ethanol from rice husk, which is a waste product from rice milling. According to Manan Goel, Gulf Petrochem’s group director, the company is looking for sites close to this feedstock supply. It has shortlisted Punjab, Haryana and Madhya Pradesh as possible sites.
“There is a big market for ethanol and even at the fixed price the project is viable,” said Brij Mohan Bansal, strategic advisor to the company. “We are talking to state government and even the central government to see what kind of incentives a green project like this can get,” he said.