Oil companies will make a payment of Rs 27 per liter towards a temporary arrangement for ethanol, which they will buy from the sugar mills for doping in petrol. Further, the final price for ethanol will be determined after the submission of report by the expert committee.
Oil Secretary S Sunderashan announced that, this is a temporary price which has authorized by EGoM. Further, the final price will be decided on the basis of recommendations by an expert committee selected for the purpose. He gave these details when asked about the outcome of an Empowered Group of Ministers (EGoM) meet held last evening.
Previously, the EGoM had set the price at Rs 27 for a liter of ethanol in April this year.
In October 2007, the Cabinet had made it compulsory to mix 5 per cent of ethanol all over the country, except in regions like Jammu & Kashmir, North-East and island territories. However, the Petroleum Ministry failed to implement the decision as a result of non-availability of the product.
Further, in March this year, the government had formed the EGoM to decide on differences over mixing of ethanol in petrol. The Chemical Ministry was against the idea of using ethanol for petrol-blending, saying that the price of molasses used for producing liquor has gone up.
Both ethanol and alcohol are manufactured from molasses, and the sugar industry had expected a production of 160 crore litres in 2009-10.
Filtered liquor sector requires about 100 crore litres whereas the 5 per cent ethanol-mixing programme would need around 68 crore litres. In addition to this, molasses are also needed for industrial purposes.
The price increase is expected to encourage producers to sell ethanol to oil firms, but the Chemical and Fertilizer Ministry had objected this by saying that the petrol-doping programme will obstruct the demand of filtered liquor sector and chemical makers.
The filtered liquor segment and chemical producers are two primary clients of molasses-based alcohol. It was said that the demand for the filtered sector was rising, and there was no reason to increase the price of ethanol to Rs 27 per liter.