Currently, it levies Rs 1.50 a litre
NEW DELHI: Maharashtra plans to remove the export fee on ethanol. At present, the state levies a fee of Rs 1.50 a litre on the movement of ethanol to other states.
This is being done to make the blending of ethanol with petrol viable.
While a number of states have shown willingness to cut down levies on ethanol, the Centre is mulling a proposal to grant ethanol declared goods status.
Officials said the ministry of petroleum and natural gas has asked the ministry of finance to consider a reduction in central excise duty on ethanol for the blending programme.
Maharashtra, with a total production of about 845 lakh tonnes, along with Uttar Pradesh, is the leading sugarcane producer in the country.
The glut in production in Maharashtra last season left over 30 lakh tonnes of sugarcane, spread over 52,000 hectares, uncrushed. This is one of the reasons why the Centre allowed ethanol production directly from sugarcane.
While Maharashtra is thinking in terms of export fee relaxation, senior officials told DNA Money that West Bengal was planning to notify a duty of Rs 2.5 a litre on ethanol being moved into the state.
Ethanol will be transported to West Bengal from Bihar and Uttar Pradesh, which also impose a fee on outward movement.
Oil companies were facing a problem in Tamil Nadu, with the state government withdrawing permission for the sale of ethanol for blending petrol.
The government-owned Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation had earlier procured 924 kilo litre of ethanol in Tamil Nadu and had contracted 1.54 lakh kilo litre in the state for a three-year period against a requirement of 1.64 lakh kilo litre.
The total ethanol quantity required for 5% blending in petrol for a three-year period is about 18 lakh kilo litre, of which 12 lakh kilo litre has already been contracted.
The Union cabinet had last week decided that a 10% ethanol- blending programme would be mandatory for oil companies from October 2008.
The three oil companies are procuring ethanol at a rate of Rs 21.5 a litre, which has been fixed, keeping in view the viability of the blending programme.
“The price had been fixed, keeping in mind the landed cost of petrol and ethanol is such that there is no loss at the blending location,” said an official.
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