State-owned oil companies will pay Rs 27 a litre, or 25 per cent higher from existing level, for buying ethanol from sugar mills for doping petrol.
Food and Agriculture Minister Sharad Pawar today said an agreement has been reached between the oil marketing companies and millers on the price of ethanol but did not give details.
Sources in the know said Indian Oil, Hindustan Petroleum and Bharat Petroleum have agreed to raise ethanol procurement price from Rs 21.50 a litre to Rs 27 per litre.
The companies will not float any new tender but will buy any ethanol offered at these rates. "Once availability of ethanol is established, the Cabinet Committee on Economic Affairs will be approached for fixing the ethanol price at Rs 27 a litre for three years," a source said.
Oil firms previously floated tenders but saw less than 40 per cent of the 51 lakh litres of ethanol required tendered.
"There is broad unanimity there (at ministers level). But the matter will go to Cabinet for a final decision," Pawar said on the sidelines of the annual general meeting of the Indian Sugar Mills Association here.
Currently, oil marketing companies (OMCs) -- Indian Oil, Hindustan Petroleum and Bharat petroleum - pay Rs 21.50 to buy a litre of ethanol while the sugar millers were seeking a price up to Rs 31 a litre.