India seen using 560 mln litres fuel ethanol a yr

SINGAPORE, Nov 2 (Reuters) India will use 560 million litres a year of fuel ethanol in the coming year, up from 130 million last year as the country promotes the renewable fuel to secure energy supplies, an industry executive said on Thursday.

''These are purchases signed up to 2009,'' Narendra Murkumbi, managing director of Shree Renuka Sugars, told a biofuels conference in Singapore. ''Fuel security is a major problem.'' India's fuel ethanol programme, launched in January, is to blend 5 percent ethanol into gasoline in 20 of India's 27 states, supported by its three major state-owned oil companies that account for 99 percent of the country's gasoline distribution.

Shree Renuka is one of about 120 companies in India that convert molasses -- a by-product of sugar -- into ethanol. It plans to expand fuel ethanol output to 70 million litres in the next crop year, from 15 million this year.

''Ethanol is the only large viable biofuel in India -- it's building on an infrastructure and industry that is already quite large,'' he said. ''We see the (total) ethanol market growing to 2.3 million litres.'' India plans to soon remove a ban on sugar exports, on expectations of a record crop, after producing 19.3 million tonnes of sugar in the season that ended in September. Indians consume over 18 million tonnes of the sweetener annually.

India also plans to replace around 5 percent of its current 40 million tonnes of annual diesel consumption with jatropha biodiesel within about five years, as it tries to limit oil imports that account for 70 percent of its needs.

REUTERS DKS DS1653