In­dian Oil plans $2.4 bil­lion ethanol in­vest­ment

The Pak Banker - - COMPANIES/BOSS -

In­dian Oil Corp. Ltd (IOCL), the na­tion's big­gest re­finer, plans to spend Rs.16,000 crore ($2.4 bil­lion) to build a plant for pro­duc­ing syn­thetic ethanol as it seeks to se­cure sup­plies of the bio­fuel to meet manda­tory blend­ing norms.

The state-run com­pany is study­ing the pro­ject to pro­duce 1 mil­lion met­ric tonnes of ethanol an­nu­ally for blend­ing with ga­so­line, S. Mi­tra, ex­ec­u­tive di­rec­tor at In­dian Oil, said in an in­ter­view. In­dian Oil plans to seek in­vest­ment ap­proval from its board next year, af­ter which the fa­cil­ity, to be lo­cated at Paradip in eastern In­dia, will take about four years to com­plete, he said.

The re­finer will part­ner with Dal­las- based Ce­lanese Corp. for the ethanol pro­ject, which will use petroleum coke as feed­stock from In­dian Oil's two re­finer­ies in the re­gion, Mi­tra said. In­dia is fac­ing a sup­ply short­age of the bio­fuel, hin­der­ing plans to achieve manda­tory five per­cent blend­ing, oil min­is­ter Dhar­men­dra Prad­han said ear­lier this month. In De­cem­ber, the Union gov­ern­ment al­lowed ethanol pro­duc­tion from non-food feed­stock in­clud­ing petro­chem­i­cals to im­prove avail­abil­ity.

In­dian Oil and two other state-run re­fin­ers, Hin­dus­tan Petroleum Corp. Ltd and Bharat Petroleum Corp. Ltd, are seek­ing 2.66 bil­lion litres of ethanol in the 12 months to 30 Novem­ber 2016. The sup­ply short­age is prompt­ing In­dian Oil, which would need nearly half of the pro­jected re­quire­ment, to con­sider pro­duc­ing its own ethanol, Mi­tra said.

In­dian Oil, which also runs the big­gest net­work of fuel sta­tions in the coun­try, bought about 186 mil­lion litres of ethanol for blend­ing through the year to 31 March. In­dian Oil shares fell 1.1% to Rs.405.25 at the close on BSE in Mum­bai on Fri­day, af­ter fall­ing as much as 3.5% ear­lier. The bench­mark Sen­sex rose 0.61% to 26,392.38 points. In In­dia, ethanol is pri­mar­ily pro­duced from mo­lasses, a byprod­uct of sug­ar­mak­ing. Mo­lasses out­put de­pends on the su­gar­cane crop, which varies each year.

"At the mo­ment, we are short on ethanol and sugar cane farm­ers won't be able to pro­duce enough," Mi­tra said in Mum­bai.

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