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Centre revises ethanol prices for upcoming sugar season

The revised price of ethanol would be fixed at Rs.40.85 per litre under Ethanol Blended Petrol programme and will be applicable for the forthcoming sugar season 2017-18

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The Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi, has approved the revision in the price of ethanol under Ethanol Blended Petrol (EBP) programme for supply to the Public Sector Oil Marketing Companies. The revised price of ethanol would be fixed at Rs.40.85 per litre and will be applicable for the forthcoming sugar season 2017-18. The revised price is Rs 1.85 per litre (4.7 percent) higher than the ongoing sugar season, effective from December 1, 2016 to November 30, 2017 which was Rs 39 per litre.

GST and transportation charges will also be payable additionally. The revised price will be applicable during ethanol supply period from December 1, 2017 to November 30, 2018, a Government of India statement has said.

The approval will facilitate the continued policy of the Government in providing price stability and remunerative prices for ethanol suppliers. It will also help in reducing dependency on crude oil imports, saving in foreign exchange and benefits to the environment, the statement claims.

In order to augment the supply of ethanol, the Government in December, 2014, decided to administer the price of ethanol under EBP Programme. The Government fixed the delivered price of ethanol during ethanol supply year 2014-15 and 2015-16 in the range of Rs 48.50 to Rs.49.50 per litre including Central and State Government taxes and transportation charges. It improved significantly the supply of ethanol from 38 crore litres during ethanol supply year 2013-14 to 111 crore litres during 2015-16.

This price was re-examined for ethanol supply year 2016-17 in the context of firming of sugar prices and falling crude prices and consequent under-recoveries of OMCs. The Ex-Mill price was revised to Rs.39/- per litre. Additionally, Central and State Government taxes and transportation charges were payable. It is estimated that for ethanol supply year 2016-17, about 65 crore litres of ethanol will be procured.

Ethanol Blended Petrol (EBP) Programme was launched by the Government in 2003 which has been extended to the notified 21 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.

OMCs have to start the ethanol procurement process for the upcoming sugar season 2017-18 for which ethanol pricing under EBP Programme needs to be decided.

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