Govt revises ethanol price for supply to public sector oil marketing companies

The government has revised the price of ethanol for supply to public sector oil marketing companies under the blended petrol scheme to Rs39 per litre against the ruling rates of Rs48.50/49.50 per litre fixed in December 2014.

For the ethanol supply period during the next sugar season (2016-17), ie, from 1 December 2016 to 30 November 2017, the administered price of ethanol for the EBP programme will be Rs39 per litre, a note issued after the meeting of the Cabinet Committee in Economic Affairs (CCEA) stated.

This, however, will not include other charges such as excise duty, VAT / GST, which will be paid additionally as actuals and transportation charges as decided by OMCs.

There is also a provision for increasing or reducing the retail selling price of petrol by public sector OMCs for maintaining the fixed cost of purchase of ethanol during the ethanol supply year.

The government will also suitably revise prices of ethanol at any time during the ethanol supply period (from 1 December 2016 to 30 November 2017) depending upon the prevailing economic situation and other relevant factors, the release stated.

The revision in ethanol prices will facilitate the continued policy of the government in providing price stability and remunerative prices for ethanol suppliers, it added.

The Ethanol Blended Petrol (EBP) programme was launched in 2003, which has been extended to the 21 notified states and 4 union territories to promote the use of alternative and environment friendly fuels. This intervention also sought to reduce import dependency for energy requirements.

However, since 2006, OMCs were not able to receive offers for the required quantity of ethanol against the tenders floated by them due to various constraints like state specific issues, supplier related issues, including pricing issues of ethanol.

In order to augment the supply of ethanol, a need was felt to put in place a new mechanism for pricing of ethanol.

Accordingly, the government on 10 December 2014 decided that the delivered price of ethanol at OMC depots would be fixed in the range of Rs48.50 per litre to Rs49.50 per litre, including central/state government taxes and transportation charges.

The decision has helped in significantly improving the supply of ethanol. Ethanol supplies increased to 674 million litres in 2014-15 and the projected supplies for ethanol supply year 2015-16 are around 1200 million litres.

A firming of sugar prices, falling crude prices and consequent under-recoveries of OMCs on this account has forced a re-examination of the pricing of ethanol under EBP Programme.