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Pakistan shies away from ethanol blending after oil marketing companies say diesel shortage more acute

February 4, 2008

In Pakistan, oil marketing companies, at a meeting of an ethanol blending task force, called for Pakistan to explore alternatives to ethanol. The OMCs said that there was no shortage of gasoline in the country; shortages are most acute in the diesel market. Pakistan, which is facing up to $11 billion in oil imports, had formed the biofuels task force to investigate the production of 65,000 metric tons of biofuels required to fulfill a 5 percent ethanol mandate.

Oil marketing companies have been critical in slowing the conversion to biofuels in neighboring India as well. A recent eport in the Economic Times said that Indian oil marketing companies, which are experiencing cash flow difficulties, are unable to switch to E5 blends that would save them $1.52 for every gallon of petrol replaced with ethanol. The reason? A complex web of state regulations and tax issues as well as entry barriers in various states.

Earlier, the Indian central government revealed a plan to slash taxes on ethanol as an incentive to stimulate demand. Currently, excise duty is 15 percent, plus state taxes of 4 to 20 percent, plus import fee, permit fee, license fee, administration fee and state excise taxes.

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    Written by Jim Lane · Filed Under International, Policy, Producer News 

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