Ethanol pricing lands in petro, agri ministries' lap

The task of resolving the contentious issue of the ethanol pricing has landed in the court of the ministries of petroleum and agriculture following the failure to reach any agreement in today's meeting between sugar companies and the representatives of oil marketing companies.

The meeting took place under the aegis of the ministry of petroleum after the talks between the two groups had failed to reach a solution on Friday.

"Sugar companies and oil marketing companies have locked horns over the issue of price. As soon as the issue is resolved, ethanol supply will start. We are ready with the supplies," said Prakash Naiknavare, managing director, Maharashtra State Co-operative Sugar Factories Federation.

The representatives of the sugar industry have been meeting with the oil marketing companies for the last few months over the ethanol pricing issue, but no consensus has been reached yet.

At present, the export realisation of ethanol is about Rs 21.75 a litre, and the industry has been selling rectified spirit (the base material for ethanol) to chemical and liquor companies at about Rs 23-24 a litre.

However, the sector, under the pressure of spiralling crude prices, is demanding a price of Rs 27 a litre from the oil marketing companies, of late.

"We have a series of meetings lined up with all the stakeholders this month. Before arriving at a final decision, a host of issues relating to logistics and supplies, apart from pricing, need to sorted out. I am hopeful that all these will be resolved well in time," said C S Nopany, president, Indian Sugar Mills' Association.

The programme of ethanol blending at 5 per cent is scheduled to start in all the states, barring the North-East, in October this year. At 5 per cent blending, the country will require about 600 million litres of ethanol, while the sugar industry has installed ethanol capacity of about 1,300 million litres.

With the international crude prices firming up, the ministries, along with all the stakeholders, should formulate a coherent policy for ethanol, feel industry experts. This, they say, will reduce dependence on imported gasoline, save foreign exchange and control pollution.

The chemical and liquor lobbies are working together against the blending programme as it is expected to lead to a diversion of current production and a price hike.