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Posted on  

January 2, 2003

India launches ethanol-blends in key states

BOMBAY (Reuters) - India launched ethanol-blended petrol in several states on Wednesday to reduce its dependence on imported oil and help the ailing sugar industry as ethanol is its by-product.

The government directed domestic petrol stations in certain regions of these nine states to sell petrol mixed with five percent ethanol with immediate effect.

Ethanol, a bio-fuel mainly extracted from molasses -- produced in the sugar-making process.

"The sugar industry must gear up to seize the opportunity," petroleum minister Ram Naik said at a function, adding the move would help sugar farmers, lower oil imports and benefit the environment.

The nine states included key sugar-producers -- Maharashtra and Uttar Pradesh.

Naik said ethanol demand from these nine states was about 320-350 million litres a year.

By June, only ethanol-doped petrol would be allowed to be sold throughout these nine states and that the rest of the country would be covered later, Naik said.

The proportion of ethanol in the blend would later be increased to 10 percent, he said.

There were also plans to enforce doping diesel with ethanol. Diesel accounts for 80 percent of the aggregate automobile fuel consumed in the country.

Naik did not set a time frame for these plans.

Automobile experts say the usage of ethanol-blended petrol reduces the emission of gases and lowers the level of carbon monoxide by enabling complete combustion of the fuel.

The main impetus for the use of ethanol in India comes from the government's concern for sugarcane farmers, who at times are unable to sell their crop due to lack of demand from millers.

The sugar industry, which has accumulated stocks of over 10 million tonnes, often fails to make timely payments to farmers for the sugar cane purchased.

India, the world's second-largest sugar producer after Brazil, is expected to produce 17.0-17.5 million tonnes of sugar in 2002/03 (October-September), down from 18.5 million in the previous year.

It consumed seven million tonnes of petrol in the year to March 2002, up six percent from the previous year. Demand for the fuel has been rising because of a surge in in the sales of cars. India imports more than two-thirds of its crude oil for its refineries that can process 2.3 million barrels per day.



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