Petrol-ethanol fusion caught in tax mix-up

The government may set aside the mandatory clause for blending petrol with ethanol due to a shortage of the fuel additive and a tax structure that makes it costly for non-sugarcane-producing states. The Cabinet Committee on Economic Affairs (CCEA) had made blending petrol with 5% ethanol mandatory and 10% ethanol optional from October 2007 in 20 states and four Union territories. The 10% ethanol blending was made mandatory from October 2008. The ministries of petroleum, agriculture and chemicals & fertilisers have recommended delaying the mandatory blending, and a decision will be taken by the new government, said a petroleum ministry official on condition of anonymity. The government is also waiting for the impact report of the 10% ethanol-blended (E-10) petrol on automobile engines and the environment, the official added. Indian Oil Corp (IOC), along with the Bureau of Indian Standards (BIS) and the Society of Indian Automobile Manufacturers (Siam), is undertaking a pilot study to ascertain the compatibility of E-10 with automobile engines. The petroleum ministry has rejected a suggestion by the ministry of new & renewable energy (MNRE) that the 5% ethanol-blending programme (EBP) should be made mandatory in sugar-producing states such as Uttar Pradesh, Maharashtra and Tamil Nadu. The mandatory implementation of “EBP can’t be forced on some states to the exclusion of others”, the petroleum ministry official said.