Having lost out at the Group of Ministers (GoM) level, the Ministry of Chemicals and Fertilisers has now managed to become a part of the Saumitra Chaudhuri committee, which will determine a formula for ethanol pricing.
The committee, which has had a few meetings earlier, had representatives from the sugar industry, food ministry, oil companies and the petroleum ministry as its members. The chemicals ministry is the latest addition.
Chaudhuri is a member of the Planning Commission.
“ A joint secretary-level officer from the chemicals ministry has been made a member of the Saumitra Chaudhuri committee. Whenever the next meeting of the committee takes place, the chemical industry will be represented through the ministry,” said an industry official.
The chemical industry had earlier opposed the plan of ethanol blending at the GoM meeting headed by Finance Minister Pranab Mukherjee.
While the chemical industry sees this as an opportunity to put across their views while the ethanol pricing formula is finalised, the sugar industry is wondering the logic behind the ministry’s inclusion in the committee considering that the panel is for pricing ethanol and does not involve the chemical industry.
The chemical industry, which is led by companies such as Jubilant Organosys and India Glycols, is one of the primary consumers of molasses (which is processed to make ethanol) along with the liquor and ethanol industries. The chemical industry had been opposing the mandatory nature of blending and a fixed price of Rs 27 per litre. The Union Cabinet has approved a mandatory five per cent ethanol blending with petrol.
In a meeting in April, GoM had fixed a price of Rs 27 per litre for ethanol. However, due to reservations expressed by Chemicals and Fertlizers Minister M K Azhagiri, another meeting of GoM was convened in July. The group again reaffirmed Rs 27 per litre as an ad hoc price and left the final price decision to the Saumitra Chaudhuri committee. This was against the prevailing price of Rs 21.50 per litre. The sugar industry has been issued a letter of intent for supply of ethanol at this price and blending is expected to start anytime soon.
Ethanol is considered a ‘green’ fuel and its blending with petrol will also help reduce India’s heavy dependence on crude oil imports. Some oil marketing companies also plan to start ethanol production themselves. Hindustan Petroleum Corporation, for instance, took over two sick sugar mills in Bihar in 2008 to produce ethanol. These mills will start producing ethanol in December.
