India’s Finance Minister condemns ethanol policies of West as “outrageous”; Petroleum Minister announces doubling of Indian ethanol content requirment

March 27, 2008

In India, Petroleum and Natural Gas Minister Murli Deora said that the national government would raise the required ethanol content in gasoline from 5 percent to 10 percent in October.

Meanwhile, Indian Finance Minister P Chidambaram, speaking at a conference in Singapore, called the policies of developed nations converting food into fuel “outrageous and must be condemned” and that the world’s poor are feeling the impact of higher food prices. “It is a sign of the lopsided priorities of certain countries that they will resort to measures that will produce fuel at a cheaper cost in order to meet the transport requirements of a section of their population,” he said. He did not offer comments on India’s rapidly expanding capacity to do the same thing.

In further developments in Indian biofuels-fromfoodstock, Tata Chemicals said will invest $185 million between now and 2012 to develop ethanol production capacity. The company announced that it would invest the first $12.7 million of that fund in a 3 Mgy sweet sorghum ethanol demonstration plant in Maharastra. The facility, which will be constructed by Praj Industries, will open in 2010. Tata said that it is exploring jatropha cultivation at five labs in Maharashtra and Gujarat. Tata Chemicals recently said that it would join the Sweet Sorghum Ethanol Research Consortium. By joining the Consortium, TCL will have access to Consortium research, including cultivation best practices and superior hybrids.

India and other countries continue to increase their focus on sweet sorghum as a feedstock, primarily because it can be cultivated on otherwise non-arable land and is inexpensive. Earlier this month, Rusni Distilleries said it was planning to double its sweet sorghum ethanol capacity to 8 Mgy in March 2008, and Ultimate Bio Fuels has announced a 19 Mgy sweet sorghum facility in Visakhapatnam. The completion of the projects will increase India’s sweet sorgum ethanol capacity to 38 Mgy.

Meanwhile, the United Nations World Food Programme (WFP) said it will need $500 million in extra funding to solve a food crisis in 36 countries, triggered by a 75 percent rise in food prices since 2000. The organization said that new outbreaks of famine were occurring in cities, where food was widely available, but residents could not afford the increased prices. The group said that more than 25,000 Indian farmers committed suicide last year over food shortages and debts, where India was experiencing an all-time low rate of agricultural growth.

An area of fertile soil the size of the Ukraine is disappearing each year because of drought, deforestation and climate change. The group also said that rising oil prices have caused fertilizer costs, which account for 25 percent of US agricultural expense, to rise more than 150 percent in the past five years.

In India earler this year, Bihar state will re-auction 60-year leases on 10 abandoned sugar mills after bids were not received on three and seven bids did not meet the reserve price. Five mills were successfully leased to Reliance Industries, Hindustan Petroleum, Rollcon Projects and SS Infrastructure were successful in their lease bids.

Bihar has indicated that it hopes to reactivate as many as 15 sugar mills to produce ethanol, although the central government has required that only mills that produce sugar and ethanol will receive a waiver from the 1966 Sugarcane Control Order which bans the direct conversion of sugar juice into ethanol fuel. Previously, ethanol could only be made from molasses.

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.

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Written by Jim Lane · Filed Under International