Indian Oil plans to enter ethanol production

Looking at organic, inorganic prospects to expand bio-fuel biz

The company plans to seek expert advice on the viability of purchasing sick sugar mills or setting up a new project. – Mr B.M. Bansal

New Delhi, March 30 Indian Oil Corporation Ltd (IOC) is studying various options for becoming an ethanol producer from being just a buyer. The company would be looking at both organic and inorganic prospects for expanding its business in the bio-fuel category.

Mr B.M. Bansal, IOC’s Director, Planning and Business Development, told Business Line that the company plans to seek expert advice on whether it is viable to purchase sick sugar mills or if it is better to set up a new project.

Currently, to sell the five per cent ethanol-blended petrol, IOC has been procuring ethanol from other suppliers. The Government has already made five per cent blending of ethanol mandatory in notified States and Union Territories and 10 per cent blending is to become effective from October this year.

Requirements

The purchase price of ethanol has been fixed at Rs 21.50 per litre ex-factory on a uniform basis for three years from October 2007. Total requirement of ethanol by oil marketing companies for five per cent ethanol-blended petrol programme implementation is 0.6 million kilo litres per year and for 10 per cent, 1.20 million kilo litres per year for the notified States and Union Territories.

Recently, Reliance Industries Ltd and public sector oil company Hindustan Petroleum Corporation Ltd (HPCL) were among the companies which were awarded financial contracts for the revival of State-run sugar mills in Bihar. However, IOC had not participated in the bids.

amended MoA

IOC has been focussing on bio-diesel projects till now. The company has already amended its memorandum of association to get into agri-related activities, particularly bio-crops that would enable it to carry out business in bio-fuels and allied products. This in effect allowed IOC to go in for cultivation of plants like jatropha to be used for blending with diesel. The company plans to be part of the full chain in the alternative fuels category, he said.