After remaining shut for two years, ethanol factories in the country are readying to whir again. With crude prices spiking again to $80 per barrel levels and the government cracking down on the 5% blending requirement, oil companies have been negotiating with sugar producers for supply of ethanol.
Ethanol factories costing about Rs 2,500 crore were set up after the ethanol blending programme was announced in 2002. However, these units had been lying idle for almost two years as the Central government started easing up on ethanol blending requirements in 2005.
The original programme foresaw blending 5% ethanol in petrol sold across the country. Ethanol content was proposed to be gradually raised to 10% by October last year. However, soon after taking power in 2004, the Central government relaxed the policy of enforcing even the 5% blending. As a result, oil companies stopped procuring ethanol for blending in 2006-07.