Search News

A GROUP of ministers endorsed a proposal by food and agriculture minister Sharad Pawar to raise the price of ethanol supplied to oil marketing companies to Rs 27 a litre, while asking sugar companies to pay a 10% penalty for not meeting their contracted supply.

The GoM meeting also decided that compliance to the ethanol blending programme will not be made mandatory, said a government official familiar with the development.

The sugar companies will also have to complete the supply the quantity under the previous 5% contract at the earlier price of Rs 21.50 per litre.

The new price set by the GoM is an interim one. A committee chaired by Planning Commission member Saumitra Chauduri will fix a “fair and remunerative” long-term price for ethanol.

Even if the committee fixes ethanol price at around Rs 25 per litre, it would mean a supply crunch to users across the board and a higher price for supplies.

The oil marketing companies had not been able to implement the government’s decision to mix 5% ethanol in petrol due to non-availability of the product. The sugar producers have been lobbying hard with the Centre for fixing a stable, long-term price for ethanol to boost their bottomlines, as they faced plummeting prices and cheaper imports. Sugarcos were only able to supply about 40% of the contracted quantity of ethanol in the previous contract. In the year ending October 2009, they supplied only 15% of the contracted quantity to OMCs.

The petroleum ministry has been mounting pressure on GoM not to make ethanol blending mandatory. It is expected to increase to 10% and 15% in a phased manner. It has also been seeking the penalty clause on defaulting sugar companies.

Quotes for ethanol supply currently are in the Rs 19-20 per litre range. But the developments will also mean higher ethanol price for the chemical industry in the future. Oil marketing companies have yet to spell out a term for the fresh contracts compared to the three year contract fixed earlier.

Find Lawyer / Law Firm

Extradition Law in India

Every time an offender stealthily leaves India to take refuge in another country, the Government of India starts all over again with its strategy of bringing him back to the nation to make him stan More

Legal Consultation - Consult over phone, chat or send questions

Helplinelaw can set up your session with quality and experienced lawyers to discuss and resolve your legal matters. You can avail consultation in form of sending questions, phone call or webchat discussion  More