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Ethanol manufacturers demand subsidies

By Sajid Chaudhry

ISLAMABAD: Ethanol manufacturers have demanded tax and duty subsidies along with change in taxation system for promotion of ethanol manufacturing and use in the country, official sources told Daily Times on Saturday.

Pakistan Ethanol Manufacturers Association (PEMA) and Pakistan Sugar Mills Association (PSMA) demanded the government to waive or exempt permit fee and excise duty on ethanol being supplied to the Oil Marketing Companies (OMCs) for blending with gasoline.

The blending or denaturing of gasoline filled tankers with ethanol fuels at distilleries for 5 percent to 10 percent as required, should be allowed. The supply of ethanol used blending with gasoline should be treated as import substitution and the presumptive income tax rules be allowed to maintain the current advantage of import based income. Terming the existing excise rules outdated, the ethanol manufacturers sought amendments in the excise rules.

Former Prime Minister Shaukat Aziz had given approval to sell blended fuel in the country in view of the rising fuel costs and to diversify the energy base. The blended fuel will have up to 10 percent ethanol and the remaining 90 percent will be gasoline.

Ethanol manufacturers urged the government to take actions as proposed by the Hydrocarbon Development Institute of Pakistan (HDIP) study on and Pakistan State Oil pilot project.

The recommendations were to start pilot project with collaboration of oil and sugar industries for a period of 1.2 years to gain necessary ground knowledge and experience of using ethanol.

In the light of above recommendations, Prime Minister had directed PSO to set up 10 ethanol blended fuel (E-10) stations with one outlet each in Islamabad, Karachi and Lahore.

Accordingly, an exhaustive pilot project E-10 gasoline station was carried out by PSO for a period of about one year, starting in August 2006 to July- 2007 and submitted its final report in July 2007.

Ethanol Manufacturers, quoting the recommendations of this report, informed the government that this report confirmed that technical performance of E-10 gasoline was found comparable to regular gasoline. No compliant with respect to performance of vehicles with E-10 gasoline were reported. There were no adverse effects on the environment as well.

Official sources told that in the meeting of task force the ex-distillery prices for PEMA was indicated at Rs 31.50 per litre excluding all provincial and federal excised duties. The meeting was also told that 65,000 metric tonnes ethanol would be required every year for a 5 percent blend in gasoline whereas 130,000 metric tonnes of ethanol would be required for 10 percent blending.

Energy consumption in Pakistan is said to increase by 13 to 15 percent per annum. Constant high oil prices in international markets have already increased import bill which is expected to reach $11 billion during the current financial year.

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