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ISMA flays oil firms for slow progress in `gasohol' programme

Our Bureau

New Delhi , Dec. 22

THE Indian Sugar Mills Association (ISMA) has accused the public sector oil companies of "dragging their feet" over implementation of the `gasohol' programme, which envisages countrywide coverage of 5 per cent ethanol-doped petrol by the end of the current year.

The oil companies are yet to finalise their new ethanol tenders, despite the supply period for the previous ones expiring in June for Uttar Pradesh and in May for Karnataka and Andhra Pradesh.

The official reason being given for going slow on the programme is the inability of sugar mills to supply the requisite quantity of ethanol on account of drought-induced sugarcane shortages. Also, the oil companies say the rates quoted by mills (around Rs 22 per litre) in the new tenders are far too high, compared to the Rs 17.50 per litre price in the earlier ones floated last year.

But according to the ISMA President, Mr Vivek M Pittie, the argument being put forth by the oil companies was specious. First of all, he claimed, that there was no shortage of ethanol in any State, barring Maharashtra. "We are willing to supply the required quantities they want. Already, the mills in the country have invested around Rs 600 crore in setting up an annual ethanol production capacity of 1,000 million litres, which can, in fact, meet the demand for up to 10 per cent blending," he said.

As for the rates, Mr Pittie said the Rs 17.50 per litre price was originally negotiated at a time when domestic prices of molasses — the raw material for producing alcohol (including ethanol) — were ruling at Rs 700-800 per tonne. Today, they are quoting at Rs 3,900-4,300 per tonne in Uttar Pradesh, while in Maharashtra, they are ruling at Rs 5,500. "If we take the Rs 4,300 per tonne price, the corresponding rate for ethanol ought to be Rs 26.50-27 per litre. But we are willing to supply at Rs 22 per litre," he added.

The ISMA President felt that the price being quoted by the mills for ethanol supplies was reasonable, more so when international crude prices alone have risen by over $20 per barrel in the last year.

Regarding the prospects for sugar production, Mr Pittie estimated the output in the current 2004-05 season (October-September) to touch roughly 120 lakh tonnes (lt), against 140 lt in 2003-04 and 201.50 lt in 2002-03. With opening stocks of 85 lt at the start of the season, the total availability of domestic sugar would be about 205 lt, which would be more than the estimated domestic consumption of around 180 lt.

"Moreover, our mills have imported about 8 lt of raw sugar so far this season. We expect total imports during 2004-05 at 15 lt, which is over and above the 10 lt imported in the previous season. All put together, the opening stocks of sugar for 2005-05 should be just about comfortable," he said.

The Vice-President of ISMA, Ms Rajshree Pathy, said the planting of sugarcane was in full swing and "we expect sugar production to recover significantly in the 2005-06". There would be no need to import white sugar under the circumstances, she added.

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