Ethanol pricing talks fall through

Oil, sugar firms fail to arrive at consensus; price hike decision referred to Centre.

Final decision on ethanol price hike has been referred to the concerned ministers as there was no consensus between oil companies and ethanol manufacturers on the price, an industry official said today.

A meeting of public sector oil marketing companies, sugar industry associations and petroleum ministry was held late Thursday to discuss the pricing issue.

"The matter (ethanol pricing) has been referred to the concerned ministers (farm and petroleum) as no consensus was reached in the meeting, and their decision will be binding on us," Prakash Naiknavare, managing director, Maharashtra State Co-operative Sugar Factories Federation Ltd, said.

Ethanol producers are seeking higher prices for selling ethanol to oil companies in line with rising crude oil prices.

The sugar industry accounts for 75 per cent of the country's ethanol production. It wants the price revised to Rs 27.83 per litre from the current Rs 18.75.

The government plans to make 5 per cent ethanol blending mandatory with petrol for oil marketing companies, and raise it to 10 per cent later.

The 10 per cent level will boost demand for ethanol to 1.1 billion kilolitre by Dec 2007 from current 4 million kilolitre.

However, availability of sufficient quantities of ethanol is ensured only if producers get a higher price.