AT a time when biofuel is losing its worldwide appeal as an alternate fuel in the wake of global food crisis, Pakistan has come up with a project to promote its use in transport on a small scale. And, to many, it may seem unnecessary at least in these times when the price of oil has come down to less than $40 a barrel.

How far can such a project in the long-term cut down the oil import bill, which stood at $11bn last year, and be of benefit to the economy is difficult to predict or assess at this stage for it won’t be on the ground before 2010 if it is not further delayed.

A report in this newspaper says that the Planning Commission has sent a summary to the federal cabinet asking it to make the necessary arrangements for blending of 10 per cent ethanol in petrol to be sold towards this year’s end. The so-called E-10 product has been proposed by an experts committee on blending of ethanol and biofuel technology, recently formed by President Asif Ali Zardari, that is headed by Zaka Ashraf, President of Zarai Tarraqiati Bank.

The committee is of the view that there is no need for any alterations in the existing vehicles in order to make them run on E-10. But after 2010, all car assemblers will be required to manufacture vehicles that totally run on E-10 for which the government will have to make necessary regulations. The summary states that the Pakistan State Oil (PSO) should start the blending process for the first year.

It is interesting to note that the PSO had already carried out the blending process successfully three years ago and even sold the E-10 blended fuel to commuters at two petrol stations, one each in Islamabad and Karachi, for six months. The experiment was undertaken under the supervision of Hydrocarbon Institute of Pakistan and later it sent a report on its performance to the ministry of water and power reportedly favouring a formal launch of E-10 product.

So, what the Planning Commission is recommending now to the government is nothing new. We had been here before. In fact, our bureaucracy has been lethargic in formulating a policy on ethanol or biofuel, maybe due to oil lobby’s pressure, and the latest proposal has come quite late and is a small step. Several countries, which felt that the problem was serious, have introduced blended fuel containing a higher amount of ethanol and thus benefited by reducing oil imports.

The US has been producing ethanol and running cars on its blend with gasoline on a larger scale to beat dependence on Arab oil and President Bush had once vowed, in an anti-Arab gesture, to turn entire America into an ethanol-producing country. In Pakistan, there was never any dearth of ethanol but all of it was exported to earn dollars. During 2007-08, the country produced 2.7 million tons of molasses and 300,000 tons of ethanol (worth $116 million) were exported.

The summary suggests that once the PSO experiment is over, the government should make it mandatory for oil marketing companies to sell E-10 and in return they should be offered a four per cent profit margin. Besides, the government should ensure that the E-10 was exempt from development levy and sales tax, and is sold at 15 to 20 per cent less price than petrol and is cheaper than CNG. This looks impossible even at this stage and one can’t predict the price range in 2010. Petrol is sold at Rs57.66 a litre and CNG at Rs45 a kg. Oil refineries, the arch opponents of biofuel, would not let this happen for they are already operating at half of their capacity to refine petrol these days.

But what the Planning Commission seems unaware of is another similar project which the Pakistan State Oil is already pursuing. A report published in this newspaper on July 7 stated that the PSO has initiated research and development work on a bio-diesel project to meet government’s deadline of blending five per cent bio-diesel with conventional diesel by 2015 and 10 per cent by 2025. How the government would manage the two projects would be of interest to watch.

The ministry of water and power had allowed, according to the report, exemption of customs duty and sales tax on import of plant, machinery, equipment and specific items used in the production of bio-diesel. A decision to this effect was taken by the Economic Coordination Committee (ECC) of the cabinet and the Federal Board of Revenue issued an SRO on May 21, 2008, allowing the exemption. Pakistan consumes approximately eight million tons of diesel per annum of which around three million tons are imported. However, the project has a long gestation period because the first step is mass cultivation of Jatropha and other non-edible seeds from which bio-diesel can be extracted.

Meanwhile, World Wildlife Fund for Pakistan has launched bio-diesel nurseries of Jatropha Curcas and Ricinus Communis plant species at Keti Bandar coastline in Sindh to produce oil that could be used as diesel for vehicles and other diesel-run machinery.

The nurseries are being established on an experimental basis on marginally saline areas. Another bio-diesel project was launched by the Alternative Energy Development Board (AEDB) in June. It aimed at electrifying a village in Thatta district by using bio-diesel.

A positive aspect of the bio-diesel project is that the alternate diesel is to be extracted from Jatropha or other non-edible plants which would not affect food crops. Many countries in Europe, the US, Brazil, Malaysia and India are also using Jatropha plants for production of bio-diesel.

In 2006, worldwide bio-fuel production had soared to 44 billion litres which included 38 billion litres of ethanol. Because of its ever-growing demand for energy, the rich world had turned to alternate fuels in a massive way in recent years. In March 2008, an eco-flight from London to Amsterdam was a great gesture to show non-dependence on fossil fuel.

The private British airline’s plane ran only one of its four engines on the experimental fuel which was a concoction of oils derived from coconut and the babassu plant. On December 31, Air New Zealand carried out a successful two hour flight with one engine of its passenger plane powered by a 50-50 blend of oil from jatropha plants and standard A1 jet fuel.

On January 30, Japan Airlines may become the first airline to conduct a demonstration flight using camelina-based biofuel, at Haneda Airport, Tokyo.

A blend of 50 per cent biofuel and 50 per cent traditional Jet-A fuel will be tested in one of the four engines. Similarly, Continental Airlines of the US will conduct the first algae-and jatropha-based biofuel-powered demonstration flight of a US commercial airliner in Houston on January 7.

How far the production of biofuels is worth pursuing in view of the growing food insecurity in most of the world needs serious rethinking. Should a country produce more food or more ethanol or Jatropha is decision that is of essence. The number of absolute poor and hungry is on the constant rise and many countries are buying farm land in poor countries to produce food for their population to fight food insecurity.

The UN Food and Agriculture Organisation (FAO) and International Food Policy Research Institute (IFPRI) have published reports in recent months showing biofuels as the main culprit for the 2007 and 2008 crop price hikes. Both organisations argue that governments should urgently review their biofuel policy because of the devastating effect its production is having on food prices and increased world hunger.