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The Competition Commission of India (CCI) has initiated a probe into alleged collusion by oil marketing companies and ethanol manufacturers to manipulate prices during bidding process for ethanol.
The move has been triggered by various complaints that the competition watchdog received recently and after a preliminary study decided to refer it for probe by its Director General (Investigation).
“We have received various complaints on the issue and it looks like there is a case which need to be investigated in detail. So, it has been referred to DG-Investigation,” a senior CCI official told Business Standard.
The complainants, including liquor manufacturers such as Lords Distillery as well as life sciences companies such as Jubilant Life Sciences, which uses ethanol or industrial alcohol for chemical manufacturing, have alleged that absolutely identical prices were quoted in bids offered by various ethanol suppliers, especially in the states of Uttar Pradesh and Gujarat.
The complaints also alleged that most of the ethanol suppliers who have colluded are either members of the Indian Sugar Mills Association (ISMA) or the National Federation of Cooperative Sugar Factories Limited (NFCSF).
According to the official, the investigative arm of the CCI will also look into the role of ISMA and NFCSF.
In November 2012, the Cabinet Committee on Economic Affairs had approved five% 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% 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% of the OMCs' five% ethanol blending requirements had been cleared.
The official said it may also send notices to OMCs seeking details and their version on the process followed.
Earlier also, CCI had received similar complaints against 10-12 sugar mills for alleged collusive bidding.
Abinash Verma, director general, Indian Sugar Mills Association (ISMA) said, “Some liquor manufacturers have filed a complaint against the ongoing bidding process for ethanol blending. Earlier, they wanted the competition watchdog to stop the tendering process. Now, they are alleging against cartelisation. The director general of CCI is investigating into it and we are sure that the ethanol blending process would happen without any glitches.”
