By By Saad Hasan
Private stakeholders from the sugar and petroleum industries have not been consulted on use of ethanol, which requires special care in handling and can be sold internationally at a better price.
Presently being sold at only three fuel-stations across the country, the E10 blend of 90 percent petrol and 10pc ethanol is far from being commercially available. But senior government officials say the project will be expanded.
“Nothing has been discussed with us,” complained Iskandar M Khan, Chairman Pakistan Sugar Mills Association. “Instead of talking the plan over, government wants to increase export duty on molasses.”
Molasses, a by-product of sugar, is distilled to make ethanol. The announcement by Industries Minister Manzoor Wattoo to tax its export in a bid to encourage ethanol production has further agitated the sugar producers.
Khan said revenues from exported molasses are used to pay sugarcane growers. “Government will actually jeopardize the farmer’s price by making it hard for us to export.”
This sugar by-product has short life of only three months, he said, explaining millers store it in open pits until the stocks are consumed. “There has been no word on any arrangement for its proper storage.”
Initiative to substitute part of petrol consumption with ethanol was taken by last government when international oil price was breaking records every day, causing rush for bio-fuels the world over.
Now oil rates have dropped and bio fuels like ethanol are relatively costlier. To make matters worst, government intends to pay less for ethanol to sugar millers from what they get in international market.
“They want to buy it at Rs32 per litre whereas we are exporting at Rs45,” Khan said, saying government must set out a proper plan for the project. “I am in favour of using ethanol as fuel but the right approach of consultative discussion with industry should be adopted.”
Pakistan produces over 2.5 million tons of molasses and about 400,000 tons of ethanol. Between Jul-May 2008-09, production of petrol was 1.18 million tons, OCAC data showed.
State-owned Pakistan State Oil (PSO), which is being used as a launch pad for the blend, had run a successful pilot project to determine its feasibility in 2007. But that was sold for few months to limited customers.
Petroleum industry people say sale at commercial scale would require investment in special facilities like tanks and transportation trucks.
“Ethanol blended gasoline is difficult to handle,” a top executive of a petroleum firm said. “It absorbs moisture very quickly and we don’t have enclosed systems to ensure that does not happen.”
Another important issue pertains to its economic feasibility, he said, adding it is important to see if ethanol’s export is more beneficial or its domestic consumption as fuel.
In recent years petrol has become a surplus petroleum product in the country. Oil refineries have often slashed production of other products to offset negative impact of drop in sales of petrol.
PSO has not given any information of how many fuel stations will be used to market the E10 blend. It is not known if the company has sealed contracts with sugar mills for supply or ethanol or has made arrangements for blending the fuel in large quantity.