Sop for sugarcane farmers in revised ethanol price

NEW DELHI: Raising the price of ethanol for blending with petrol from Rs 21.50 to Rs 27, the Cabinet Committee on Economic Affairs (CCEA) on Monday approved the proposal for implementation of Ethanol Blended Petrol (EBP) Programme in the country except for the north-eastern states, J&K, Andaman & Nicobar and Lakshadweep.

The price of Rs 27 per litre though would be purely interim, clarified the government.

The proposal is targeted at enhancing benefits to the sugarcane farmers. According to a statement, the government intends to implement the programme early and this will be possible with a fixed price initially, and thereafter dynamic formula-based pricing as per the recommendations by the expert committee.

A Group of Ministers (GoM) has recently reaffirmed the Rs 27-per-litre price for ethanol will be paid by the oil marketing companies to the sugar companies. The chemical industry and oil marketing companies had demanded a much lower price in line with prevailing domestic price of around Rs 18 per litre.

"The programme would become sustainable with the dynamic pricing formula, which will ensure that there is no adverse impact on oil or the sugar industry," said the government statement.

"The proposal relating to variable percentage of blending would ensure that surplus of ethanol available in different states is adequately absorbed in the EBP Programme at the same time, deficit in supply in some parts of the country does not adversely affect the programme on all India basis," it added.

Following the announcement, shares of sugar companies rallied over 6% on the stock exchanges. On the Bombay Stock Exchange, Bajaj Hindusthan gained 6.11%, Simbhaoli Sugars was up 5% and Shree Renuka moved up 3.4%.

In October 2007, the Cabinet had made mandatory 5% ethanol blending across the country except a few states and union territories.

However, the petroleum ministry had not been able to implement the decision of mandatory doping of 5% ethanol in petrol due to non-availability of the product from producers.

In March, the government had constituted the GoM to resolve differences over mixing of ethanol in petrol. The Chemical Ministry was objecting to the use of ethanol for petrol-blending, saying the price of molasses they use for manufacturing liqour had gone up.Both ethanol and alcohol are made from molasses and the sugar industry has estimated a production of 160 crore litres in 2009-10.

A price increase was supposed to lure the producers into selling ethanol to oil firms, but the Chemical and Fertiliser Ministry protested saying petrol-doping programme will impinge upon the demand of potable liquor sector and chemical makers.

source: TOI