 "CCEA decides to cut ethanol prices for petrol blending from Dec 1")
The Cabinet Committee on Economic Affairs (CCEA) on Thursday cleared a proposal to come up with a new mechanism for revision of ethanol prices for supply to public sector oil marketing companies (OMCs) to carry out the Ethanol Blended Petrol (EBP) programme. Through this, the price of ethanol for blending will be cut to Rs 39 per litre, excluding taxes, from December 1. The current level of prices, inclusive of taxes, is Rs 48.50-49.50 per litre.
OMCs have already delayed in floating expression of interests to invite producers to commit supplies of ethanol for the period, between December 2016 to November 2017, for the blending programme. Ethanol is a cane byproduct and this may also add to the storage costs of sugar mills.
The CCEA, chaired by Prime Minister Narendra Modi, also said that charges will be paid to the ethanol suppliers according to the actuals in case of excise duty, value added tax and goods and services tax, and transportation charges as decided by OMCs. The government can also review prices at any time during the ethanol supply period depending on the prevailing economic situation.
"The revision in ethanol prices will facilitate the continued policy of the government in providing price stability and remunerative prices for ethanol suppliers,” the government said in a statement on Thursday. The EBP programme was launched by the government in 2003, and has now been extended to 21 states and four Union Territories to promote the use of alternative and environment friendly fuels.
However, since 2006, OMCs were not able to receive offers for the required quantity of ethanol against tenders floated by them due to various constraints like state specific issues, and supplier-related issues, including pricing issues of ethanol. In order to augment the supply of ethanol, a need was felt to put in place a new mechanism for pricing of ethanol. Accordingly, the government on December 10, 2014, decided that the delivered price of ethanol at OMC depots would be fixed in the range of Rs 48.50 per litre to 49.50 per litre.
The decision has helped in significantly improving the supply of ethanol. Ethanol supplies increased to 67.4 crore litres in 2014-15 and the projected supplies for ethanol supply in the year 2015-16 are around 120 crore litres.
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