Government-owned oil marketing company, Hindustan Petroleum Corporation Limited (HPCL), has finalized orders for supply

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of ethanol to blend with petrol in 16 states and four union territories. But, owing to shortfall in supply, demand for ethanol couldn’t be fulfilled.

Moreover, blending couldn’t be carried out in Orissa, Tamil Nadu and Jharkhand because of the interference from state governments on movement of ethanol. Also, HPCL has started its pilot project for 10 per cent ethanol blending in petrol.

“Supply orders were finalised on competitive bidding basis through public tenders for 18 States and ethanol blended petrol (EBP) supplies commenced in 16 states and four union territories during 2006-07,” said a HPCL official, on conditions of anonymity. But, there is a shortfall in supply of ethanol for which the company is unable to meet complete target, he added.

HPCL has finalised order for 3,91,248 kilolitres (80 per cent) of ethanol for three years as against requirement of 4,90,785 kilolitres as projected in the tender.

“The short fall is due to non-supply of ethanol by suppliers against firm orders for three years. Appropriate action in line with supply contract has been initiated against defaulting suppliers,” said the official.

Fresh tenders were floated to meet shortfall in quantity. But, suppliers could not be finalized by HPCL owing commercially unviable rates quoted by bidders and suppliers refused to reduce the rates.

Petroleum ministry directed government-owned oil marketing companies to implement blending of five per cent ethanol with petrol beginning November 1, 2006 subject to commercial viability in 20 states and 4 union territories. Last month, cabinet committee on economic affairs directed petroleum ministry to ensure sale of five per cent ethanol doped petrol by oil marketing companies.

HPCL could not finalise ethanol order for Orissa due to unviable rates. West Bengal government imposed various conditions for obtaining licenses for storage and selling of ethanol. Ethanol Blended Petrol (EBP) was discontinued in Tamil Nadu (consequently Pondycherry, supplies ex-Tamil Nadu) as state government could not spare ethanol for EBP due to shortage of spirit. EBP in Jharkhand was kept in abeyance as state government subsequently started levying import fee making EBP commercially unviable to oil companies, the official added.

Meanwhile ten per cent EBP pilot project was commenced in Aonla in Uttar Pradesh and Desur in Karnataka since December, 2008.

Meanwhile, Bharat Petroleum Corporation Limited (BPCL) has said that the company has floated tenders to buy ethanol for blending with petrol but denied to divulge details on the matter.

An e-mail sent to Indian Oil Corporation (IOC) asking how the company will follow the government notification and what steps will be taken to ensure that petrol is blended with 5 percent ethanol remain unanswered.