Sugar mills laud cabinet nod to linking ethanol, cane prices

The Indian Sugar Mills Association (ISMA) Thursday welcomed the government decision to link the ethanol price to the sugarcane price saying it will directly benefit farmers.

"Sugar industry is required to pass on 70 percent of the revenue from primary by-products and, therefore, this move will mean higher revenue to the farmers also," ISMA said in a release here.

The Cabinet Committee on Economic Affairs (CCEA) Wednesday approved a mechanism for procurement of ethanol by state-run oil marketing companies (OMCs) for carrying out the ethanol blended petrol (EBP) programme.

The CCEA approved replacing the current system on ethanol with one that fixes the delivered price of ethanol in the range of Rs.48.50 per litre to Rs.49.50 per litre, depending upon the distance of sugar mill from the particular OMC depot or installation.

"The present mechanism of procurement of ethanol based on a benchmark price decided by OMCs may be replaced by a new mechanism of uniform price of ethanol declared for each sugar year," the cabinet approval read.

The ISMA said this decision "will mean a successful ethanol blending programme and a quicker movement to higher blending percentage". "5 percent ethanol blending will save foreign exchange to the tune of $800 million, equivalent to Rs.5,000 crore," it added.

Under the EBP programme launched in 2003, OMCs were directed to sell 5 percent ethanol blended petrol subject to commercial viability.