Govt to raise ETHANOL price to increase output

NEW DELHI: In a view to increase country’s ethanol output, Indian government is likely to raise the fixed price of ethanol nearly 5 percent to 10 percent from its current level in the coming months.

An industrial official said “The government may raise the fixed price of ethanol up to Rs 24 per litter from Rs 21.5 per litter”.

The current price of ethanol was fixed when crude oil was trading at around USD60 per barrel, and it is now trading above USD120 per barrel.

The higher price of ethanol would encourage more output, which is necessary to hit India's mandatory 10 per cent biofuel blending target by October this year, he said.

The current level of mandatory blending is 5 per cent.

"There is no shortage of (feedstock for ethanol production) to meet the 10 per cent blending target as well as the needs of the chemical and liquor manufacturers," said the official.

India produced a record 30 million tons of sugar in the crop year ending Sept. 30, 2007, and is projected to produce around 28.3 million tons in the current year, said the official.

Output in the 2008-09 crop year is projected lower around 24 million tons due to an expected decline in the area planted in sugarcane as farmers switch to more profitable crops such as wheat and rice.