Pawar writes to PM on ethanol

Says panel went beyond its brief. Report suggested ethanol for blending should be capped at 400 million litres against the requirement of 860 million litres.

Union Agriculture Minister Sharad Pawar has written a letter to Prime Minister Manmohan Singh that the draft report of Saumitra Chaudhuri committee on ethanol is beyond its brief. He has also sought early declaration of the final ethanol price. The committee's draft report suggested ethanol for blending be capped at 400 million litres against the requirement of 860 million litres.

“The minister has said the committee does not have the mandate to discuss anything other than pricing. He has also requested a quick decision on price since ethanol supplies have started," said a person familiar with the development.

Chaudhuri, a Planning Commission member, has said in a draft report that even if just 500 million litres are earmarked for the ethanol programme, then 500-700 million litres will be left for the chemical industry after meeting the demand of the potable sector. The committee has observed that this quantity of 500-700 million litres is lower than the 'normative' requirement that approximates the usage in past two years but is close to actual consumption in the immediately preceding two years.

The committee has also said in its draft report that it is 'neither feasible nor appropriate to require that the alcohol-based chemical industry be effectively denied access to domestically produced alcohol'. The committee's draft report was circulated to the members last Friday.

The committee was set up to recommend the pricing formula/principle of ethanol after taking into account the various factors/dynamics affecting the pricing. Second, it was enjoined to examine the different aspects implicit in the pricing, including the impact on the pricing of sugarcane and petroleum products and the impact on competing industrial use.

The Union cabinet approved an ad hoc price of Rs 27 per litre for ethanol and set up the committee to come up with a pricing formula. The oil marketing companies-Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation-have signed contracts with the sugar companies for purchase of 580 million litres. Ethanol supplies have also started and blending is expected to begin this month.

The chemical industry led by companies such as Jubilant Organosys and India Glycols, is one of the primary consumers of molasses (which is processed to make ethanol) along with the liquor and ethanol industries. It had been opposing the mandatory nature of blending and a fixed price of Rs 27 per litre.