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NEW DELHI: After months of deliberations, the Union Cabinet on Monday decided to fix an interim price of Rs.27 for a litre of sugarcane-extracted ethanol for blending with petrol.
However, the final price will be set on the recommendations of a committee of experts.
At a meeting here, the Cabinet Committee on Economic Affairs approved the increase in ethanol price, from Rs.21.50 a litre, for five per cent mandatory blending with petrol.
“The government intends to implement the Ethanol Blending Programme early, and this will be possible with a fixed price initially, and thereafter a dynamic formula-based pricing recommended by the Expert Committee,” an official release said.
A committee of experts, headed by Planning Commission Member Saumitra Chaudhuri, will determine the formula for deciding the future pricing of ethanol.
The Ethanol Blending Programme will become sustainable with the dynamic pricing formula, which will ensure that there is no adverse impact on the oil or sugar industry, the release said.
Last month, a Group of Ministers (GoM) reaffirmed a price of Rs.27 a litre for ethanol to be paid by the oil marketing companies to sugar companies.
The chemical industry and oil marketing companies (OMCs) had demanded a much lower price in line with the prevailing domestic price of Rs.18 a litre.
In October 2007, the Cabinet made five per cent blending mandatory across the country, except Jammu and Kashmir, the North-east and the island territories.
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