Cabinet Committee on Economic Affairs approves interim price of ethanol to Rs 27 per litre

Govt fixes ethanol price at Rs 27 a litre


17 Aug 2010 PETROLEUM BAZAAR

The government today fixed an interim price of Rs 27 a litre for sugarcane-extracted ethanol for doping in petrol, but a final rate will be set after an expert group gives its recommendation.The Cabinet Committee on Economic Affairs has approved an interim price of ethanol to Rs 27 per litre from existing price of Rs 21.50 per litre for five per cent mandatory blending with petrol."Government intends to implement the programme early and this will be possible with a fixed price initially and thereafter dynamic formula based pricing recommended by the Expert Committee," a government release said.
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A committee, headed by Planning Commission member Saumitra Chaudhuri, would determine the formula for deciding the future pricing of ethanol.The Ethanol Blending Programme (EBP) "would become sustainable with the dynamic pricing formula which will ensure that there is no adverse impact on oil or the sugar industry," the statement said.



Following the announcement, shares of sugar companies rallied over six per cent on the stock exchanges. On the Bombay Stock Exchange, Bajaj Hindusthan gained 6.11 per cent, Simbhaoli Sugars was up 5 per cent and Shree Renuka moved up 3.4 per cent.Last month a Group of Ministers (GoM) had reaffirmed Rs 27 per 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 Rs 18 per litre.In October 2007, the Cabinet had made mandatory five per cent ethanol blending across the country sans Jammu & Kashmir, North East and island territories. However, the Petroleum Ministry had not been able to implement the decision of mandatory doping of 5 per cent ethanol in petrol due to non-availability of the product from producers.Courtesy:BS