Kharagpur (WB): The two-year old imbroglio over the procurement price for ethanol for fuel-blending seems set for resolution, with the government likely to increase the purchase price this month.

At the inauguration of a biofuel research centre in IIT Kharagpur, Union minister of new and renewable energy, Farooq Abdullah said a proposal for raising the purchase price of blending ethanol to Rs 26-27 per litre will taken up by the Cabinet this month.

“We have reached an agreement (between the ministries) during late December,” he said, adding that the blending schedule is also likely to be ramped up from 5% this year to 10% during 2011.
Crores of rupees worth of investment in ethanol factories has been lying idle for nearly two years after suppliers backed out of commitments to supply the biofuel at rates ranging from Rs 17-20 per litre.

Under the current system of procurement, oil companies invite tenders for the supply of ethanol from sugar producers and others, with both the price and quantity left to the bidder.

Bigger ethanol producers opted out of the system as they found smaller companies bidding for small quantities at low prices.
According to the current bid rules, the lowest bid price is applicable to all suppliers, irrespective of quantity.

Oil companies, in turn, have been complaining that they cannot afford to buy ethanol at prices near Rs 30 per litre, as the major suppliers have been demanding.

According to them, they cannot get subsidy from the central government for supplying ethanol below cost and purchasing the biofuel at Rs 30 or above would result in under-recoveries due to the existing tax structure and price cap.

In most states, they point out, petrol attracts taxes of around Rs 20-25 per litre.

Abdullah, however, did not specify whether the government is thinking of extending fuel subsidies to bio-fuels or of giving them breaks from local taxes, a long standing demand of the oil companies.

He also said people whose hands are “greased by the oil industry” have been trying to scuttle alternate energy programs in India.

He said India would add 20,000 mw solar and 10,000 mw of wind energy capacity over the next 12 years.

“We are looking at adding 1,300 mw of solar energy in the next two years, including around 200 mw of distributed generation [on buildings],” he said. Current solar energy capacity is minuscule, with most projects in the range of a few mw each.

source: dnaindia

0 comments

Creative Commons License

This is not a company blog or website. The views and statements expressed in this blog are absolutely subjective. All content here is either copyrighted or by the mentioned news sources.

Privacy Policy | Contact Us