March 20, 2002

    Shri Ram Naik, Minister of Petroleum & Natural Gas, has approved the proposal to use ethanol as an oxygenate in Petrol (Motor Spirit) instead of the use of Ethyl Tertiary Butyl Ether (ETBE). Making a Suo Moto statement in the Lok Sabha today, the Minister said that this decision has come in view of its advantages to the oil industry, sugarcane growing farmers and the environment. The ETBE was suggested to be an alternative to ethanol as ETBE is also considered to be a better oxygenate than the Methyl Tertiary Butyl Ether (MTBE). This decision would on the one hand lead to the increased use of ethanol and would also result in phasing out of the use of MTBE.

    "The decision to use ethanol as an oxygenate would, on the one hand, lead to its increased use and would also result in phasing out of the use of MTBE. In India, MTBE is being used as an additive to the petrol at two refineries - Mumbai refinery of Bharat Petroleum Corporation Ltd. and Koyali refinery, Gujarat of Indian Oil Corporation Ltd. There has been a growing concern about the use of MTBE as oxygenate in petrol as it is reported to result in water pollution when it seeps into the ground water and gives unacceptable odour to the water. Incidentally, the US Senate has recently approved the phasing out of MTBE over four years" stated Shri Naik .

    While taking this decision, the Minister considered the recommendations of a Committee of Experts set up under the Chairmanship of Dr. S.J. Chopra, Executive Director, Centre for High Technology (CHT). The Expert Committee has concluded that the blending of ethanol with petrol was a better option as compared to blending of ETBE from the various aspects viz. operational, financial, environmental, technical, logistics, etc. The Committee has said that the blending of ETBE would be required to be done at refineries involving huge cost for setting up of ETBE Plants. Each such Plant would cost about Rs. 100 crore as against about Rs. 30 to 40 lakh for creating ethanol blending facilities at Depots. The total investment would range between Rs.75 crore to Rs.100 crore for ethanol blending at about 250 depots in the country. In addition, ethanol is a biodegradable product and can technically be blended upto 10 per cent in gasoline without effecting major changes in petrol engines. It has high octane number and better thermal efficiency. This approach of using ethanol is less capital-intensive and decentralised as depots are located all over India.

    Presently, ethanol is being blended in petrol in 3 pilot projects launched at Manmad and Miraj in Maharashtra and Bareilley in Uttar Pradesh. Further, blending at three more locations in U.P. (Gonda, Kanpur and Najibabad), two in Punjab (Bhatinda and Pathankot) and one in Andhra Pradesh (Rajmundry) are planned. Government has already taken a decision to expand the blending of 5% ethanol with petrol throughout the country in two phases. The first phase would cover the Sugarcane growing States of Andhra Pradesh, Gujarat, Haryana, Karnataka, Maharashtra, Punjab, Tamil Nadu and Uttar Pradesh. The rest of the country would be covered in the second phase. To promote the use of ethanol in petrol, the Finance Minister has announced in the budget for the year 2002-03, an excise duty concession of Rs. 0.75 per litre on petrol blended with ethanol.

    Shri Ram Naik informed the House that the use of ethanol (5%) in petrol leads to better combustion and significantly lower emission of pollutants. For 5% blending of ethanol with petrol on all India basis, about 500 million litres of ethanol would be required. The decision to use ethanol had been made in view of the advantages of use of ethanol accruing to the oil industry, sugarcane growing farmers and the environment. The Minister expressed confidence that the entire country would reap the benefits of this far-reaching decision.