C.S. Nopany in Calcutta on Thursday. A Telegraph picture

Calcutta, Aug. 17: With the October deadline for blending ethanol with petrol looming large, the government and sugar mills are now in a hurry to finalise the price at which this molasses derivative will be sold to oil marketing companies.

C.S. Nopany, who is the president of the Indian Sugar Manufacturers’ Association (ISMA), said the price would be finalised by the end of this month.

ISMA is negotiating the price on behalf of sugar mills and the process of blending 5 per cent ethanol with petrol is scheduled to begin in October.

“We have been discussing with the petroleum secretary and Indian Oil Corporation on the price issue and nothing has been finalised yet,” Nopany said. IOC is negotiating on behalf of the oil companies.

Nopany said the price of Rs 18.75 for a litre of ethanol was unviable as it was based on a price for molasses of Rs 1,700 kg.

The ISMA chief said sugar mills would not settle for anything less than Rs 27 a litre as the prevailing price of molasses was much higher at Rs 2,500 a kg, and it also varies across states.

The sugar mills had last month refused to accept the price of Rs 21 a litre offered by the government.

The mills are also opposed to tendering of ethanol. They want oil marketing companies to enter into long-term contracts with the mills.

The government had to abandon its plans to commence petrol doping (blending) last year as it could not procure sufficient amounts of ethanol.

“The price of molasses was high and there was a shortage in sugarcane production,” Nopany said.

The oil marketing companies have argued that since the equivalent calorific value — the energy value — of ethanol is 40 per cent lower than petrol, the price should be 60 per cent of petrol. This is the practice in Brazil, whose petrol doping programme is a model for the rest of the world.