Date:12/05/2005 URL: http://www.thehindubusinessline.com/2005/05/12/stories/2005051200721000.htm

Back Ethanol-blended petrol programme — We responded to Petroleum Ministry's draft MoU, says ISMA

L.N. Revathy

Coimbatore , May 11

THE Indian Sugar Mills Associaton (ISMA) has denied that it has not responded to the Petroleum Ministry's draft memorandum of understanding on long-term supply of ethanol for the blended petrol programme.

Ms Rajshree Pathy, President, ISMA, said the association, after holding talks with its constituents — National Federation of Cooperative Sugar Factories, All India Distillers' Association and Ethanol Manufacturers Association — had written back to the Ministry with its points of view.

"ISMA's response was exhaustive. It dealt with all the points in the MoU,'' Ms Pathy told Business Line.

She said she had briefed the Petroleum Minister, Mr Mani Shankar Aiyar, and the Additional Secretary, Mr M.S. Srinivasan. "After a brief discussion, it was decided that the tenders would be finalised soon,'' she added.

Meanwhile, senior members of ISMA emphasised the need for lifting alcohol stock as the storage position was turning critical in all the States. The commencement of the season was making it imperative for lifting the stock at the earliest.

"While the Minister responded immediately by asking the oil companies to finalise the tenders soon, nothing has been finalised yet. The papers are pending for the last five months,'' Ms Pathy said, and pointed out that recent discussions held in Uttar Pradesh indicate that the prices seem to be acceptable to both — sugar factories and oil companies.

"But nothing has been concluded so far,'' she said.

She lamented that the oil companies opened the tenders but delayed finalisation.

"The ethanol programme has been aimed at enabling farmers get additional revenue. In spite of the commitment of the Petroleum Ministry to this project, the oil companies seem to be dragging the issue, perhaps hoping to get a downward revision in prices. They are fully aware that with sugar production back to normal levels, the industry will face molasses glut,'' she said.

Reiterating the industry's commitment to meet adequate and uninterrupted supply of ethanol, Ms Pathy said the oil companies should also correspondingly be placed under an obligation to make regular purchases and maintain adequate storage facilities at all the blend stations to ensure uninterrupted offtake of ethanol.

Sugar industry sources have expressed concern over the lack of response from the oil companies in finalising the tender without assigning any reason.