Govt may hike ethanol blending limit to 20% in future: Praj

The government has decided to waive off 5 percent excise duty on ethanol for blending with petrol. Applauding the move, Gajanan Nabar, CEO & MD, Praj Industries, said it is a step in the right direction.

In an interview with CNBV-TV18, Nabar said the government may further go up to 20 percent blending in future. He also said the move is essential for producers, especially the cash-strapped sugar mills by reduction in their cost.

The company will be benefited as the ethanol required for blending 20 percent will be close to 400 crore litre, he added.

Below is the edited transcript of Gajanan Nabar’s interview with Reema Tendulkar on CNBC-TV18.Q: How will this waiving off of excise duty on ethanol for blending with petrol improve the prospects for the industry and therefore for your company as well? A: First of all, it is a step in the right direction and more it reconfirms governments resolve to blend the 5 percent and then furthermore to go to 10 percent. That is a very good initiative. It reconfirms that government is serious about this 5 percent blending. Secondly, we need to get the details. We don’t have all the details in front of us right now but this would help the producer especially the sugar mills which are cash strapped. It will help them with reduction and overall the blending should go up.Q: For your company in particular, you manufacture equipment for ethanol. Do you think now with the prospects of ethanol improving, there will be more demand for the company’s products? A: It is definitely a step in the right direction. Overall, we believe that the government is very positive and committed to the blending program as they want to go up to 20 percent blending. I think that would be close to another 400 crore litre of ethanol. It is large amount of ethanol which will be required to do 20 percent. However, at least the first step is to go to 5 percent and with these kind of changes and fine tuning of policy would certainly help. Q: How much will this save, this waiving off of 5 percent excise duty at current estimates? A: I think it will be about Rs 1.5 but we will have to do the fine working on it. Q: So roughly maybe Rs 1.5 will be the benefit? A: Yes.