Ethanol price may be fixed under 27/litre

NEW DELHI: An expert panel is expected to suggest a price of slightly less than 27 per litre for oil marketers to buy ethanol for a nationwide fuel-blending programme , an official said.

The committee, formed to recommend a price for ethanol for the ethanol-blended petrol programme announced in August last, may submit its report in a fortnight, said the official privy to the committee discussions.

A price close to the interim 27 suggested by an empowered group of ministers will be remunerative to ethanol manufacturers as it is higher than current market prices, the official said.

Oil marketers have already begun to sell ethanol-doped petrol in select markets and since the final price will be close to the interim price, they will not have to make much payment adjustments.

The government had announced a modified ethanol-blended petrol ( EBP )) programme in August last year to be implemented across the country except north-eastern states, Jammu & Kashmir, Andaman & Nicobar islands and Lakshadweep.

Under the proposal cleared by the Cabinet Committee on Economic Affairs, there will be an uniform ex-factory price throughout the country for ethanol to be procured by oil marketing companies.

The government had announced an interim price of 27 per litre and simultaneously formed a committee headed by Planning Commission member Saumitra Chaudhuri for fixing a final price.

In the first part of its report, the committee had suggested scaling down the programme due to inadequate availability of ethanol and competing demands from the potable alcohol and other industries.

But the sugar industry protested, saying that the committee did not have the mandate to go into the availability issue. The food ministry too said the committee exceeded its brief.

Committee members argued that the pricing issue could not be decided without first getting a fix on availability.

The ethanol-blending programme could not take off in the last sugar season (October - September) because of lack of availability.

But the prospects look much better this year because a bumper sugarcane crop is expected. Ethanol is produced as a by-product in sugar making.

The petroleum ministry has said oil marketers have received bids for 100 crore litres of ethanol during the sugar year 2010-11 against their requirement of 105.3 crore litres.

The government hopes the programme will help reduce the country's reliance on imported fuel and help save foreign exchange reserves.

source: ET