Ethanol imports from Brazil not a viable option: Experts

It is not mandatory for oil marketing companies to sell ethanol blended petrol from November. What does this mean for domestic ethanol makers, especially those who have expanded capacity in anticipation of the move? Investment Advisor SP Tulsian and Narendra Murkumbi of Shree Renuka Sugars give their views.

SP Tulsian believes that there has been a delay on the part of the government and the oil marketing companies to kick-start the whole process, which was to take place from October 1, which they have conveniently delayed to November 1. He further states that the import of ethanol from Brazil is not a viable option in the near future.

Narendra Murkumbi, MD, Shree Renuka Sugars feels that one is witnessing a lot of commercial posturing from the oil marketing companies side, which is fair in a market driven economy. Murkhumbi echoes SP Tulsian's view that the import of ethanol from Brazil is not a viable option in the near future.

Excerpts of CNBC-TV18's exclusive interview with SP Tulsian and Narendra Murkumbi:

Q: How much of a set back is this news for the industry, were you banking a lot on ethanol blending? Have this and also a proposed move to import ethanol from Brazil come in as a bit of dampener?

Murkumbi: First, I do not understand this news about there not being a mandate. To the best of our knowledge, there exists a mandate even today and the mandate was imposed way back in December 2004.

The mandate clearly protects the interest of both the ethanol producers as well as the oil companies because it clearly says that the mandate only applies as long as ethanol is competitive. I think what one is seeing is a lot of commercial posturing from the oil marketing companies side, which is fair in a market driven economy.

Q: What is the competitive price? I think they are saying Rs 28, what would you say?

Murkumbi: I think that petrol price today is around Rs 30. We had offered something like Rs 23-24 and oil companies wanted it at Rs 21.5. According to me, the import parity price, without any import duties, is between Rs 24 and Rs 26 at the moment. So from all aspects, it is very competitive.

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