With crude prices hovering over $75 a barrel during the last one month, search for fuel alternatives and additives is gathering pace. In India, so far the consumers have not looked beyond gasohol — a mixture of petrol and ethanol in the ratio of 95:5. Ethanol is derived from molasses got from crushing sugarcane.

But with pricing of sugarcane being determined by policies of the Union and State Governments, consumer focus has now turned to maize (corn). Industry players see demand for corn to produce ethanol rising to 10 lakh tonnes in the next three years, though not a grain of corn is currently being used for the purpose.

Taking lead in this direction, the Ahmedabad-based Gujarat Ambuja Exports Ltd, an agro-processing and trading company, plans to set up a plant that will manufacture ethanol from maize (corn). It will be the first of its kind in the country when it is likely to become operational in the next fiscal.

Plant capacity

“The plant will process 160 tonnes of maize a day,” said Mr K.C. Khona, Chief Financial Officer of the company.

The plant will come up at Nashik in Maharashtra as part of a processing complex it plans to set up there. The plant will also produce extra neutral alcohol (ENA) that will be sold to liquor manufacturers. “Our plant can process 160 tonnes of maize for crushing ENA also,” Mr Khona said.

Currently, ethanol-doped petrol is sold only in some States. The progress of the programme, which could lead to a demand of 550 lakh kilo litres of ethanol, has been tardy as the oil market companies have been slow in their purchases. Also, the programme is facing problems of taxation in seven States.

Corn demand

According to Mr Khona, given the prevailing prices of crude oil, corn-based ethanol plants could come up in India and demand from such plants could touch 10 lakh tonnes in three years from now.

That could further cause problems in supply of maize in the country. Already, the country is facing a short supply with production hovering around 125-130 lakh tonnes against a demand of 140 lakh tonnes.

It could also lead to increase in prices of maize. Starch manufacturers, who use maize, are already complaining of higher prices and have demanded a ban on its exports. Currently, maize prices are ruling around Rs 850 a quintal. Maize is primarily used by the poultry sector as feed.

Conversion costs

Mr Khona said the cost of manufacturing ethanol from maize could be on par with sugarcane. According to the US Department of Agriculture, the cost of converting corn into ethanol is between Rs 12.52 and Rs 12.76 a litre. In the case of sugarcane, it is Rs 9.84.