GoM reaffirms 27/lt price for ethanol

NEW DELHI: A group of ministers (GoM) on ethanol headed by finance minister Pranab Mukherjee that met on Monday reaffirmed the `27/litre price for ethanol to be paid by the oil marketing companies to the sugar companies. The chemical industry and oil marketing companies had demanded a much lower price in line with prevailing domestic price of around `18/litre.

Chemicals minister MK Azhagiri, who has been opposed to the price, had insisted in a letter to the PM that the issue be brought back into the ambit of the GoM and not be rushed through the cabinet committee on economic affairs. The GoM, he said, was set up to reconcile the differences between the various stakeholder ministries on the issue and not to decide on the price of the commodity.

Sugar mills have, however, been pushing for a hardbound three year price of `27/lt on the contention that this would ensure long term assured supply to the Ethanol Blending Programme (EBP) of the government. Meanwhile, an empowered group of minister (EGoM) on food that also met here this evening on an array of issues related to high food inflation and checking consumer prices discussed increasing the rice and wheat allocation to Above Poverty Line (APL) consumers on the Public Distribution System (PDS).

The move is expected to help clear overflowing stocks besides increasing supply in the home market and pegging prices down. Over 11.5 crore APL families will be able to access the additional wheat. Currently, they get wheat at `10.5/kg and rice at between `6.50-8.50/kg.

EGoM also agreed to release another 3 million tonnes of grain into the market even as it reportedly deferred a decision on wheat import duty after flour millers appealed to the Centre against it. Pointing out that global wheat prices had firmed up and precluded big imports of wheat into the home market, millers dubbed any move on import duty at this juncture as “ill timed”.

The over 12% food inflation may also have created the ground for the EGoM to put off, at least for now, a decision to hike APL foodgrain issue prices as well a decision on wheat import duty. Under pressure to not take any decision that would remotely increase consumer price for food essentials, the EGoM also did not take any decision on hiking import duty for white sugar although the issue has been pending for a long time.

The decision on hiking the levy sugar price for mills has already been taken and the EGoM on Monday was only meant to give formal approval to the additional spend, the levy price per kg has been hiked by almost 30% by the government.