Pakistan biofuels industry calls for E5 mandate, and excise tax reform

In Pakistan, the Pakistan Ethanol Manufacturers Association (PEMA) and Pakistan Sugar Mills Association (PSMA) have called on the central government to impose an E5 ethanol mandate, and to amend excise rules to waive permit fees and excise duties on ethanol. The association called the imposition of excise fees “outdated” in light of the country’s focus on diversifying its energy source mix.

Oil marketing companies in Pakistan early in February called on 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 report 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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