3 Oil PSUs to Build 12 Ethanol Plants for Rs 5,000-7,000 Cr

Three oil majors Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation will establish around 12 ethanol manufacturing plants as part of a road map to meet the 20% ethanol blending target by 2025, according to a recent report in Financial Express.

Tarun Kapoor, secretary, ministry of petroleum and natural gas, has said that the state-owned companies have been asked to set up around 150 crore litre per annum ethanol manufacturing capacity out of 1,000 crore litre that will be required to meet the target by 2025. This will entail an investment of Rs 5,000 crore to Rs 7,000 crore, he added.

The companies will also be simultaneously setting up storage facilities for ethanol procured from other manufacturers, as the final blending is done by refiners and the oil marketing companies, he said. The investment will likely be funded by the companies themselves.

India has already achieved a blending percentage of 5% in FY2021. This year, it is estimated that India will cross 8% blending average. As per the road map for ethanol blending in India 2020-25, by Niti Aayog and the ministry of petroleum and natural gas, there are certain challenges that need to be overcome before the target could be achieved, such as ensuring availability of ethanol across states for blending; about 50% of total pump nozzles in India are supplying only E0, which means zero blending capacity.
Restrictions on inter-state movement of ethanol due to non-implementation of the amended provisions of Industries (Development & Regulation) Act, 1951, by all the states, is the other big challenge. So far, only 14 states have implemented the amended provisions.

Some of the major states consuming petrol where implementation is pending include Delhi, Uttar Pradesh, Rajasthan, West Bengal, Telangana, Odisha and Kerala.

The government has also iterated the need for change in marketing infrastructure by setting up additional storage tanks for ethanol at marketing terminals and depots, need for ethanol compliant dispensing units. Besides, having additional underground tank, pipes, hoses and dispensing units for ethanol at the retail outlets.