Cabinet to take up ethanol price hike issue today

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New Delhi, Sep 3 : The Union Cabinet in its meeting on Thursday is expected to take up the issue of raising the price of ethanol sold by sugar mills to oil companies to Rs 30 per litre from the existing Rs 21.50 per litre ahead of the mandatory 10% blending starting in October.

The government’s earlier proposal to make 5% ethanol blending mandatory from October 2007 could not take off, as sugar companies were not willing to sell ethanol at a price of Rs 21.50 per litre. Sources said the new pricing mechanism takes care of the cost of producing ethanol and also gurantees some returns to the sugar mills.

India’s annual sugar production, which is in excess of 25 million tonnes is expected to produce substantial quantities of ethanol to take care of 10% mandatory blending.

Meanwhile, agency reports said that the Cabinet Committee on Prices to be chaired by Prime Minister Manmohan Singh may also review differences between the minimum support price of different commodities and the market rates.