Indian petrol ministry expresses doubt on meeting new ethanol mandate

In India, the petroleum and natural gas ministry has expressed skepticism on the 10 percent ethanol mandate scheduled for October 2008. The officials say that sugar cane production is too cyclical in nature to sustain the mandate.

The E10 mandate has been championed by the Agricultural ministry as a means of handling the nation’s severe sugar overproduction. India is projected to have a surplus of 11.5 million tonnes, based on a projected 33.15 million tonnes harvest this year, which would be a world record for national sugar production. Recently, 10 sugar-producing states have agreed to a framework for a national E10 mandate. India’s sugar crop this year is expected to exceed 29 million metric tons. With domestic consumption at 19 million tons and exports at 1.5 million tons, the country is turning to ethanol production to avoid a catastrophic sugar glut.

Meanwhile, the chaos of implementation has spread to the state level in India. Maharashtra state will remove its interstate export fee on ethanol, to help make production of ethanol from sugar economically viable, but West Bengal will impose a $0.20 per gallon tax on ethanol imported from other states. Bihar and Uttar Pradesh also have imposed an export fee.

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