Sugar co-ops seek ethanol price fixed, shun tender

The National Federation of Cooperative Sugar Factories (NFCSF) is against the tender system of ethanol procurement suggested by the Ministry of Petroleum and it wants a fixed price for supplying ethanol to the oil marketing companies (OMCs).

"We would ask the Ministry of Agriculture to take up the matter of price negotiation with the Ministry of Petroleum once again", said Vinay Kumar, the managing director of NFCSF.

"We are expecting a three to five year price settlement for the supply of ethanol with an escalation clause. We had offered to supply ethanol at a price of Rs 26.50 a litre but the oil marketing companies insisted to buy at a rate of Rs 21.50. There can be a settlement somewhere between the two prices, added Kumar.

However, the president of Indian Sugar Mills Association and the chairman and managing director of Oudh Sugar Mills C.S.Nopany said, "The tender system is a good move and this would bring fairness and transparency in the sale and purchase of ethanol".

On Wednesday, the Ministry of Petroleum (MoP) directed the OMCs to drop the idea of directly buying ethanol at a negotiated price from the sugar companies.

Instead the OMCs have been asked to come up with a tender system to enable all the suppliers to participate in an open and transparent manner.

The sugar industry representatives have been negotiating with the oil marketing companies since last few months over the pricing of ethanol but no consensus has been reached so far.

In August 2005 the sugar companies had entered into a one-year contract to supply ethanol at a rate of Rs 18.75 a litre. The ethanol blending programme at the rate of 5 per cent is due to start from October this year in all the states barring the North-East.

At five per cent blending, the country would require about 587 million litres of ethanol. The sugar industry has an installed ethanol capacity of about 1300 million litres.