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Gasohol supply in AP, Karnataka by mid-August

R. Balaji

Chennai , July 31

THE oil companies have issued letters of intent to procure anhydrous alcohol from distilleries in Andhra Pradesh and Karnataka for the manufacture of ethanol-blended petrol, gasohol. This has paved the way for the gasohol programme taking off by mid-August in these States, according to sources in the know.

The programme is yet to take off in Tamil Nadu where issues relating to local levies need to be cleared, they said.

Gasohol supply in all the markets in Karnataka and partially in Andhra Pradesh is expected to commence in mid-August when the formalities including board approvals and issue of purchase orders by oil companies are likely to be done.

In Andhra Pradesh the programme will cover the four markets in Ongole, Rajamundry, Visakhapatnam and Vijayawada. It will be extended as and when ethanol is made available. Two more ethanol projects are expected to go on stream over the next few months and will enable gasohol supply in more markets, sources said.

This follows the concessions extended by Andhra Pradesh and Karnataka on the local levies. Earlier, the base price of ethanol quoted at Rs 17.50 per litre by the distilleries was an issue with the oil companies reluctant to pay the price for long-term contracts. However, with Andhra Pradesh bringing down sales tax to 4 per cent from 20 per cent and Karnataka cutting the litre fee by 50 paise to charge Rs 2, the oil companies have been provided with some relief. The oil companies have requested the Karnataka Government to further bring down the litre fee to 80 paise.

In Tamil Nadu, the issues are yet to be resolved. While the distilleries have quoted Rs 17.50 as the base price, the hitch is that the sales tax is at 12 per cent and surcharge 5 per cent apart from an administrative fee of Re 1 per litre.

Further, oil companies, which have to transfer fuel between themselves for logistical reasons, will have to be exempted from the purview of local taxes for such transfer of gasohol. The companies are exempt where other fuels are concerned, and a similar notification has to be extended for ethanol-blended fuel also, according to sources in the know.

Meanwhile, the five distilleries in Tamil Nadu that had been given the go ahead for the manufacture of anhydrous ethanol are sitting on stocks estimated between Rs 70 lakh and Rs one crore.

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