India’s Ethanol Blending Programme (EBP), in which alcohol is added to petrol, has landed into legal trouble. Bhartia-group promoted petrochemical company Indian Glycols Ltd has dragged the Competition Commission of India to the Supreme Court over its decision to reject its appeal against the alleged bid rigging in EBP. The petrochemicals industry faces higher prices and lower supply of ethanol because of its use in automotive fuel. The blending programme reduces India’s oil demand and helps cane farmers and the sugar industry. 

 

The appeal is also against the ministry of oil & natural gas, food & consumer affairs and chemicals & fertilisers, the three state run oil companies, Indian Sugar Mills Association (ISMA) and National Federation of Cooperative Sugar Factories, the stakeholders in the ethanol blending programme. In its appeal to the apex court, IGL has alleged cartelisation by the sugar mills and has termed meetings between the oil companies and the mills for price discussion and fixation of ethanol for blending with petrol as “anti-competition.” 

 

Indian Glycol has filed a petition in CCI in March 2012 alleging violation of Competition Act in the EBP. But CCI closed the matter finding no prima-facie case of violation. A subsequent application in the Competition Appellate Tribunal (COMPAT) was also rejected. “…The impugned actions by the COMPAT and the Commission reflect the total non-application of mind as to the facts before them and the legal position,” said the petition filed by Indian Glycol in SC reviewed by ET. 

 

The petition also said that with limited availability of molasses based ethanol in the country, any diversion of ethanol “shall adversely affect the very existence of the chemical industry in India.” Indian Glycol has also alleged that the difference in the market price and the "cartelised price" of ethanol is between 15% to 30%. 

The Cabinet Committee on Economic Affairs vide its press release dated 22.11.2012 approved mandatory 5% ethanol blending with petrol and further directed that the procurement price of ethanol would be decided between buyers and sellers. 

In a separate complaint made in the Competition Commission of India in June last year, IGL and Easter India Chemicals limited alleged that the cabinet’s direction to oil companies and sugar mills to procure the ethanol price through tendering led to tremendous rise in price of domestic ethanol and scarcity of ethanol for the petrochemical industry.