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. Last Updated: 07/27/2016

Red Tape and Taxes Hinder Plans to Produce Bioethanol

High taxes and bureaucracy are obstructing plans by Russian companies to launch production of bioethanol as a cheaper and environmentally friendly alternative to gasoline, industry and government officials said Tuesday.

They said more than ten Russian companies had announced plans to produce bioethanol from grains, but none of the potential producers was willing to proceed until laws were eased.

"I'm not very optimistic about development of bioethanol production in Russia as the tax component is too big," Grain Union head Arkady Zlochevsky told a bioethanol conference.

Volatile crude oil prices have pushed consumers to use more green fuels from renewable resources. But construction of Russia's first bioethanol plant in Volgograd -- due to begin in spring -- has been postponed.

"Construction has been put on hold until we see some legislative changes in six to seven months," said Andrei Sredny, head of projects and investments at VIPOIL, the company managing the Volgograd project. "Oil companies want us to export bioethanol. But we don't want the government to accuse us of supporting producers in Poland, Germany or elsewhere and not Russian producers."

Were Russia to have 5 percent biofuel in overall gasoline production, demand for bioethanol would be 1.25 million tons by 2010, said Nikolai Sorokin, deputy head of a department in the Agriculture Ministry, told the conference.

An increase in area sown to sorghum, maize and wheat would enable the country to produce 6-7 million tons of bioethanol by then. Sorokin declined to forecast how much would actually be produced.