Gulf Petrochem investing Rs 1,000-crore to set up ethanol plant in India

Gulf Petrochem is going to set up an ethanol manufacturing plant in India at the cost of Rs 1,000-crore, said a senior company executive.

It has been a decade since the government decided to blend 5% ethanol with fossil fuel to cut vehicular emissions, a measure that was later made mandatory. But India is far from reaching the target, managing at most 2% blending as oil marketing firms say there is not enough ethanol available, reported the Economic Times.

The country required more that 115 crore litres of ethanol to meet its target. But Indian units manufacture only 80 crore litres, creating a big gap between demand and supply for the product.

According to ethanol manufacturers who are mostly sugar makers, state levies and the price fixed by the Centre Rs 48.50 a litre is a deterrent to capacity expansion.

Manan Goel, Gulf Petrochem's group director, told ET: "We want to grow in India. Besides our oil business, we have diversified into steel. Now we want to get into ethanol manufacturing."

"States have been inviting investments so we are looking for a site where we can get the land closer to the raw material availability," he said.

The UAE-headquartered entity Gulf Petrochem, a company promoted by brothers Ashok Goel and Sudhir Goyel, has been mainly into oil trading, refining and bunkering. It now wants to enter the ethanol market with a production unit that would make around 60,000 kilolitres of ethanol by 2017-18.

While almost 90% of India's ethanol is manufactured from feedstock of molasses, the company may adapt a technology that uses rice husk.

"There is a big market for ethanol and even at the fixed price the project is viable. The government has indicated that if there is ethanol available at the fixed price, oil marketing companies will buy it," said Brij Mohan Bansal, strategic advisor to the company.

Bansal said that so far the ethanol manufacturing units have been concentrated in states that produce sugarcane and, therefore, Gulf Petrochem is looking at other states which don't have enough capacity.

It has shortlisted Punjab, Haryana and Madhya Pradesh and would finalise a site soon.

The current government is exploring increasing ethanol content in auto fuels to 10%.
(Image: Gulf Petrochem website)