Sugar mills, industry bodies face CCI probe on identical bids for ethanol

Charge is forming of cartel while submitting bids to OMCs for ethanol blending with petrol

The Competition Commission of India (CCI) has ordered its director general (investigation) to probe the alleged collusive bidding for ethanol supply to oil marketing companies by 10-12 sugar mills, officials said on Wednesday.

“The case has been referred to DG-Investigation. It will soon send notices to these companies seeking their response on the matter,” an official said.

The companies include almost all major sugar manufacturers, including Balrampur Chini and Bajaj Hindusthan.

The investigative arm of the CCI will also look at the role of Indian Sugar Mills Association (Isma), Ethanol Manufacturers Association of India and National Federation of Co-operative Sugar Factories, he said.

He said while there are some prima facie indications these companies might have formed a cartel to file identical bids, the investigation will further probe if there were pacts between players regarding filing of bids.

In November 2012, the Cabinet Committee on Economic Affairs had approved five per cent mandatory blending of ethanol with petrol and this was notified by the Centre under the Motor Spirits Act on January 2. According to the Act, oil marketing companies (OMCs) have to record five per cent ethanol content in petrol by June 30 this year. However, considering the supply orders cleared to sugar mills, the target seems unachievable. In a letter to the petroleum ministry dated May 29, Isma had said OMCs had cleared ethanol supply orders for merely 250 million litres, against the requirement of 1,050 million litres. This means that only 25 per cent of the OMCs' five per cent ethanol blending requirements had been cleared.

Officials said oil companies procured a low volume because the prices offered by ethanol producers were unviable. Prices offered by domestic producers are in the range of Rs 38-49 per litre.

“Various rounds of negotiations have already been held to ensure greater supply but because the prices quoted by sugar mills are so high, the negotiations are still underway,” officials said.

According to the official, the competition watchdog may also seek information from oil marketing companies including Indian Oil, Bharat Petroleum and Hindustan Petroleum.

CBI had registered a first information report on May 3 in this matter alleging that Kumar had paid ~2 crore as bribe money to Singla’s associates in exchange for his posting in the electrical department. CBI had laid a trap where they caught a bribe of ~90 lakh being exchanged between Singla’s and Kumar’s associates in Chandigarh.

CBI had registered an FIR on May 3 in this matter alleging that Kumar had paid ~2 crore as bribe money to Singla’s associates in exchange of his posting in the electrical department. CBI had laid a trap where they caught a bribe of ~90 lakh being exchanged between Singla’s and Kumar’s associates in Chandigarh. All accused in the case have been arrested including Ajay Garg, Narayan Rao Manjunath, Managing Director, G. G. Tronics India, and close aides of Singla - Samir Sandhir, Rahul Yadav, Panchkula-based Sandeep Goyal.

The government, along with the industry, has initiated string of measures to tackle the situation. The Centre is already working on a ‘track and trace’ mechanism, which would enable monitoring the supply chain at all the levels---primary, secondary and tertiary.

“In due course, online application filing and tracking system would be evolved to bring in sufficient expediency and transparency in the entire supply chain,” the statement said.

The government has also expressed enthusiasm to meet international requirements for exports of pharmaceutical products by taking steps to comply with the new procedural requirements of the European Union (EU) for import of active pharmaceutical ingredients into the EU.

According to commerce ministry data, India is the largest exporter of formulations, in terms of volume, with a market share of 14 per cent. In 2012-13, India exported pharmaceuticals worth $14.5 billion. The US is the largest market for Indian generic drug makers, followed by the UK.