Indian sugar mills association

Gadkari seeks PM`s help in early decision on ethanol pricing policy

Date:	27 Dec 2011

Source:	The Financial Express

Reporter:	Banikinkar Pattanayak

News ID:	804

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New Delhi: Bharatiya Janata Party President Nitin Gadkari has sought Prime Minister Manmohan Singh`s intervention in firming up the ethanol pricing policy for the mandatory 5% blending with petrol. A formula recommended by an expert committee under the chairmanship of Planning Commission member Saumitra Chaudhuri has been awaiting the government approval for around eight months now.

In a letter to Singh, the BJP leader said, “For over one year, the sugar mills/ethanol manufacturers have been supplying ethanol at a provisional price of R27 per litre, even though the price of alternate products from molasses like rectified spirit, alcohol etc. are fetching a price of around R34 per litre, causing unnecessary loss of revenue to the industry.”

The Saumitra Chaudhuri committee has recommended linking of the ethanol price with the price of petrol, with a discount of 20%. The decision on ethanol has been delayed in the current marketing year that started October 1, mainly due to the chemical ministry`s apprehension about inadequate supplies for potable alcohol, sources said. A cash-strapped sugar industry, marred by various government controls over the sector, says R33 to R34 per litre of ethanol would be a fair price for 2011-12.

The government had mandated the 5% ethanol blending with petrol in October, 2007. In a separate letter to Renewable Energy Minister Farooq Abdullah, the BJP president demanded early finalisation of the ethanol pricing policy as it is “beneficial to all the stake holders including oil companies, sugar mills, cane farmers, petrol consumers as well as the government”. “I believe that this will give about R2000 crore savings to the oil companies from the 5% ethanol blending programme,” he said in the letter.

Last month, Abdullah had said the Cabinet would likely revise the ethanol price by end-November. The minister had also pitched for doubling the current limit of mandatory blending with petrol to 10% starting next year. “Once the final pricing formula is approved by the government linking it to petrol price, more ethanol supplies would be encouraged,” said Indian Sugar Mills Association director general Abinash Verma.

Sugar mills have contracted to supply 600 million litres of ethanol at the interim price of R27 per litre for 2011-12, although the price will be revised according to the government`s decision, said another executive.

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