Ethanol pricing issue to be sorted out by Aug-end

The Indian Sugar Mills Association (ISMA) is hoping to reach a consensus on the pricing of ethanol with oil companies by the end of August.

The sugar industry has been lobbying hard to restart blending of ethanol with petroleum products, which was discontinued last year.

ISMA President C S Nopany told reporters here that the association had series of discussions with individual oil companies on pricing of ethanol.

"We are discussing the issue of ethanol blending virtually every week. We hope that by end of August it will be settled. Sugar industry is looking for a long-term agreement with the oil companies," he said.

According to him, the sugar industry has demanded a price of Rs 27 a litre for the blending of ethanol.

"The oil industry had earlier offered a price of Rs 14 to Rs 15 a litre. But now the ground reality has changed, as the price of molasses has doubled since then," he said.

According to him, the prevailing price of molasses is close to Rs 2,500 a tonne, which earlier was Rs 1,200 to Rs 1,300. The Central government has permitted 5 per cent blending of ethanol with petrol.

Nopany added that the country would require 587 million litre of ethanol for 5 per cent blending.

"We have a production capacity of 1 billion litre of ethanol for the purpose of blending with petrol. This does not include ethanol used for other purposes, like in chemical industry," he added.

The ISMA president argued that the blending of ethanol should be increased to 10 per cent to save foreign exchange.

"With the existing capacity, we can go up to 10 per cent blending. We found that ethanol-blended petrol is more energy efficient and it has already been proved through research in Australia," he added.