Oil firms to buy ethanol at Rs 27 a litre from sugar mills

Centre gets oil firms to revive sugar mills

The Centre has decided to give a leg up to Maharashtra's troubled
cooperative sugar industry. A group of ministers (GoM), headed by
Finance Minister Pranab Mukherjee, decided on Tuesday that oil firms
must buy ethanol at Rs 27 a litre from sugar mills. This is 25 per
cent more than the current Rs 21.5. Ethanol is a by-product of sugar
molasses that is mixed with petrol.
Vilasrao Deshmukh, Union minister for heavy industries and a member of
the GoM, said the decision was taken on Tuesday and will be forwarded
to the Cabinet."We decided that ethanol price should be hiked from Rs
21.5 to Rs 27 a litre. The oil companies will also have to bear the
transport cost," Deshmukh said. "Five per cent blending [of ethanol
with petrol] will be mandatory and this will be raised to 10 per cent
as ethanol production goes up."
The decision will benefit sugarcane farmers and factories being run
mostly by Congress-NCP leaders in Maharashtra, but it's unlikely to go
down well with the state-owned oil companies that are already reeling
under losses because of fuel subsidies. Brij Mohan Bansal, chairman,
Indian Oil Corporation, said: "This move will impact oil companies."
An official with an oil firm said: "The recent hike in petrol prices
will ensure the net realisation for oil firms goes up even if ethanol
prices rise."
Maharashtra's 160-odd cooperative sugar factories, which form the
backbone of the rural economy in those areas and help political
parties wield power, are doing poorly because of trade fluctuations,
errant monsoons and mismanagement.The five-member GoM - including
Deshmukh and Agriculture Minister Sharad Pawar, who are part of
Maharashtra's powerful sugar lobby, petroleum minister Murli Deora,
chemical and fertiliser minister M.K. Azhagiri - was set up in March
to resolve differences over mixing of ethanol into petrol. "We will
support any project that benefits farmers and oil companies," Deora
said.

....from the pages of HINDUSTAN TIMES newspaper.