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Pricing policy for bioethanol procurement gets Cabinet nod

Posted on Nov 23, 10:13AM | IBNS

The Cabinet Committee on Economic Affairs (CCEA) Thursday approved the issue of pricing for bio-ethanol procurement by Oil Marketing Companies (OMCs) for Ethanol Blended Petrol (EBP) Programme.

According to CCEA, the 5pc mandatory ethanol blending with petrol as already decided by the CCEA in the past, should be implemented across the country, for which the Ministry of Petroleum and Natural Gas will immediately issue a gazette notification for the OMCs to implement from the 2012-13 sugar season, effective from Dec 1.

The procurement price of ethanol will be decided henceforth between OMCs and suppliers of ethanol, CCEA noted.

In case of any shortfall in domestic supply, the OMCs and Chemical companies are free to import ethanol. It is expected that 5pc bio-ethanol will be blended with petrol sold in all the States and UTs of the country, informed CCEA

"The EBP Programme is presently being implemented in a total of 13 states with a blending level of about 2pc against a mandatory target of 5pc ," CCEA asserted.

"A stable EBP programme would ensure sustainable benefits for the sugarcane farmers across the nation."

"It will ensure an alternative market for the farmers who frequently get adversely affected in case of bumper crops of sugarcane and the lack of its demand in the market. It will also provide an incentive for small and medium farmers to increase efforts towards sugarcane crop as better returns would be ensured, " the committee said.

Procurement of ethanol at a price determined by the market will ensure stability, said the committee.

"EBP programme not only provides opportunities to sugarcane farmers, but it also ensures the use of ethanol as a bio-fuel in a big way which is environment friendly. Besides, to the extent of implementation, this reduces the dependence on imported crude and leads the nation ahead on fuel self sufficiency. "

Earlier, The CCEA in its meeting held on Aug 16, 2010 had approved the ad-hoc price of Rs. 27.00 per litre for bio-ethanol for procurement by OMCs.

However, this price was subject to adjustment on the basis of the recommendation of an expert committee for pricing of ethanol.

Later an Expert Committee headed by Member of Planning Commission Saumitra Chaudhury considered the issue of pricing of ethanol.

In its report, submitted in March 2011, the expert committee recommended a formula which was derived broadly from the price of motor spirit.

Subsequently, a report by the Economic Advisory Council to the Prime Minister submitted on March 10, 2011, recommended the fixation of price of bio-ethanol through the market mechanism.

The issue of procurement price for bio-ethanol has been considered by a Group of Ministers and the CCEA.