Bangalore: Government would increase the percentage of ethanol mixture in petrol from five per cent to 10 and also supply ethanol blended diesel in the third phase, Union Petroleum and Natural Gas Minister Ram Naik said on February 1.

By June 30 this year, Goa, Gujarat, Haryana, Karnataka and Tamil Nadu and the Union Territories of Chandigarh, Daman Diu, Dadra Nagar Haveli and Pondicherry would be covered with the supply of 5 per cent ethanol blended petrol, he said.

Speaking at a seminar on bio-fuels from non-edible oils, Naik said in the second phase, the remaining states would be covered.

In the third phase, the percentage of ethanol blend would be increased to 10, he said, adding that research and development studies on it were at an "advanced stage" of completion.

Government, he said, had signed a memorandum of understanding (MoU) with Brazil, which would facilitate the transfer of technology in the fields of blending ethanol with petrol and diesel at higher proportions.

Noting that 80 per cent of the automobile fuels consumed in India constituted diesel alone, he said increasing the percentage of ethanol in petrol to 10 would not require any change in the engines of vehicles.

Oil companies, he said, would purchase ethanol by inviting tenders from those who quoted competitive rates. "It has to be ensured that ethanol is produced and supplied at competitive rates."

Government, Naik said, was also for promoting use of bio-fuel from non-edible oils. He also said a national policy on bio-fuels would have to be evolved with the participation of all the stake holders like co-operatives, non-governmental organisations (NGO), panchayat raj institutions and state governments.

India, Naik said, imported 70 per cent of its crude oil requirement of about 105 million tonnes, which cost Rs 78,000 crore in 2001-2002. Even a 10 per cent reduction in it through use of ethanol and bio-fuels would mean a saving of Rs 7,500 crore in foreign exchange.

Referring to the oil prices, he said international oil market had always been volatile and it would become much more so "when new situations develop". A barrel of crude cost $ 19 to 20 in February-March 2002, but now it had shot up to $ 32 without any increase in the production cost.

The increase, he said, was partly because of the "fear psychosis" about a possible war between US and Iraq. Strike since December 2002 by workers in Venezuela, a major oil exporting country, and more energy consumption during winter in countries like US and Europe were other contributing factors.

PTI