Petrochem dept throws spanner in mills’ ethanol pricing works

NEW DELHI: The department of chemicals and petrochemicals ( DoCP) seems to have put a damper on the attempts of an empowered group of ministers to expeditiously clinch the price of ethanol supplied to oil marketing companies ( OMCs) by sugar mills.

The department has questioned the EGoM’s brief on the issue arguing that its mandate was to “harmonise the views of concerned departments on the issues of implementation of the ethanol blending programme”. Ethanol pricing, it argued, was only a secondary issue.

The EGoM’s meeting on April 6 here had fixed an interim price of Rs 27 per litre for ethanol supplied to OMCs for bleinding with regular fuel. The price was to prevail for six months from the date of notification, but it is yet to be notified.

An expert panel headed by Planning Commission member Saumitra Chaudhury set up to spell out a long-term “fair and remunerative” price has not met even once.

OMCs are also yet to offer fresh contracts to ethanol suppliers. Quotes are currently at the Rs 20 per litre level.
Government officials indicated “a likelihood” that the compostion of the EGoM on ethanol may change to accomodate other stakeholding ministries such as non-cnventional energy, especially in order to offset the heavily weighted pro-Maharashtra leaning of the current group.

Headed by Finance Minister Pranab Mukherjee, the EGoM at present includes food, PDS and Agriculture Minister Sharad Pawar, Heavy Industries Minister Vilasrao Deshmukh and Petroleum Minister Murli Deora, all from the state that produces the highest quantity of sugar in the country, apart from Chemicals Minister M K Azhagiri.

The higher ethanol price compared to Rs 21.50 per litre in the earlier contract was aggressively pushed for by Mr Pawar.

When the EGoM met here last, the DoCP had submitted a note stating that it was against the interest of the chemical industry to implement the EBP programme and that the 5% EBP should be deferred until the availability of ethanol was ensured without affecting the industrial sector.

No specific price should be fixed for ethanol buys by OMCs, the department had contended, while demanding that the customs duty on import of industrial alcohol be reduced from 7.5% to zero.