Gassed into surrender

TWO months after asserting that it would not revoke the excise duty imposed on methane generated from effluent treatment plants (ETPs), the ministry of finance has backtracked. In the last budget, a 10 per cent excise duty was levied on methane from effluent treatment plants (ETPs), which is used almost entirely in distilleries.

L N Batra, secretary general of the All India Distillers' Association (AIDA), represented to the finance ministry that the levy would be a "setback to the programmes of environmental protection" and "adversely affect the viability of the effluent treatment projects". Praveen Choudhury, AIDA assistant secretary, said an ETP in a typical 30,000 litre per day distillery generates about 11,000 cubic metres of biogas, saving Rs 22,000 worth of coal daily. The biogas also meets 70 per cent of a distillery's energy needs.

But finance ministry officials were not swayed. They maintained the budget had phased out about half the number of excise exemptions to generate revenue. The officials even questioned the reliance on tax exemptions to address environmental concerns. Says an adviser to the ministry, "The ministries concerned will have to devise other forms of incentives and disincentives to encourage the use of nonconventional energy."

Ultimately, however, the finance ministry succumbed to pressure from AIDA, which mobilised support from the ministry of non-conventional energy sources and the ministry of environment and forests. Officials of both ministries condemn the position of the finance ministry as contrary to the Union government's policy of providing incentives for pollution control and generation of energy through effluent treatment. The finance ministry may find that it is not easy to delink fiscal measures and environmental concerns.