Clean Power (Pvt.) Limited

Ethanol >>

Main Concerns regarding Ethanol as Fuel

Concerns of Oil Marketing Companies and Oil Refineries

•	Ethanol, if blended with petrol shall reduce sales of petrol. The excess petrol capacity in the country is a major concern of the oil industry. They argue that reduced gasoline production shall have negative impact on refinery margins and profitability.
•	There is no logistics mechanism for ethanol fuel; including infrastructure for blending, storage, transportation and retail dispensing. Putting these mechanisms in place for fuel ethanol will require heavy investments by the refineries and/or OMCs Oil Marketing Companies.
•	Blending of ethanol with gasoline at refinery or storage depots is complicated.
•	Blended ethanol has a higher octane rating, so sensitivity to engine can be a problem.
•	Use of ethanol may affect driving conditions.

Except for the profitability, rest of the concerns are technical in nature. A guideline from other ethanol using countries can be sought for answers to technical queries. Moreover CPL has also conducted

Concerns of the Ethanol Producers

The ethanol producers are pushing for a legislation permitting use of ethanol as a fuel. There are 4 plants in Pakistan currently producing fuel-grade ethanol, and several others are preparing to join the league. However, the major concern of the ethanol producers is the sale price of ethanol. According to them, the FOB Karachi price of molasses should be used as the basis for determining the sale price of ethanol in Pakistan.

Concerns of the Government

•	The biggest concern of the Pakistan Government is energy security, which is compromised with most of our energy needs being met from foreign sources.
•	Rising crude oil prices lay an enormous burden on our national exchequer. Also, high fuel prices may affect development growth in the country.
•	Environmental concerns associated with fossil fuel combustion are a source of increasing concern for the Government, particularly since the ratification, by Pakistan, of the Kyoto Protocol.
•	The Government is concerned about the price of fuel-grade ethanol. Unless the price of ethanol is less than that of petrol, the consumers will not be interested in purchasing it, and there will be no “pull” from the consumers.
•	The Government of Pakistan does not want to be in a compromised position at the hands of either of the two major groups of players (ethanol producers and OMCs / refineries). A sticky situation has already arisen with the cement sector, and the Government does not wish the same scenario to be repeated with the fuel ethanol program.

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