Indian sugar mills association

Ethanol blending in fresh price hurdle

Date:	10 Jun 2013

Source:	The Economic Times

Reporter:	Shreya Jai

News ID:	2323

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NEW DELH: The Union government's ethanol blending program seems to have hit another hurdle. After a spat between state-owned oil marketing companies (OMCs) and sugar mills over the pricing of ethanol blended petrol, two chemical companies have questioned mandatory blending. In a complaint to the Competition Commission of India, Indian Glycol and Easter India Chemicals have alleged that the Cabinet's direction to oil companies to procure ethanol from sugar mills through tendering has led to ethanol's high prices and shortage. "A joint tendering by the three OMCs was an agreement among the horizontal players to procure anhydrous alcohol from various suppliers in clear contravention of the provision of the Competition Act 2002," said the letter reviewed by ET. Another submission said, "Sugar mills are alleged to have created an artificial scarcity for industrial and potable use leading to a sudden spurt in prices." "It is submitted that sugar mills who participated in the joint tender of 2013 manipulated the bids by quoting similar rates and in some cases identical rates through an understanding and collective action in violation of the provisions of the Act," said the letter. The complaint is against 17 sugar mills, three state-run oil companies, Indian Sugar Mills Association, National Federation of Co-operative Sugar Factories and Ethanol Producers Association of India. The sugar industry has denied cartelization charges and said bids for ethanol came from over 500 players across the country in a price range of Rs 39 to Rs 51. "One company is holding a national program at ransom. Ethanol-blending is a cabinet decision taken after years of deliberation and understanding all the impacts," said Vivek Saraogi, managing director, Balrampur Chini. He said cartelisation is not possible in the sugar industry with many fragmented players. "It's a frivolous complaint by a vested party. The company which quoted in the bidding has challenged that very program," said Saraogi. Indian Glycol's subsidiary Shakumbari Sugars participated in bidding with around 4 crore litre of ethanol. Bhartia grouppromoted Indian Glycols refused to comment saying the matter was sub-judice. Indian Glycol had filed a case with CCI last July condemning the Cabinet decision to fix ethanol prices.

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