Dynamic Pricing Mechanism 1G Ethanl 00
Ethanl Blended Petrl (EBP) Prgramme At 10% blending with petrl, 280 crre litres f Ethanl required. Last year requirement was 266 crre litres Supplies were 111 crre litres @4.3% blending Against 280 crre litres requirement, 2 runds f EOI has given 78 crre litres f cntracts fr 2016-17 (Dec-Nv) 11
EBP Prgramme Supplies Histry 2015-16 (Dec 15 t Nv 16) EOI with an intent t achieve 10% blending acrss India. Excise duty n ethanl has been exempted alng with ease in finalisatin f tender. Required Qty- Qy 266 Crre litres, Supply Qty - 111 Crre litres 2016-17 (Dec 16 t Nv 17) Tender fr 10% blending acrss India. Excise duty exemptin emptin is withdrawn. Ethanl price is changed t ex-factry realisatin f Rs 39/litre. Net realisatin is further reduced due t freight, taxes and duties impact. Required Qty - 280 Crre litres, cntracted quantity 78 Crre litres Blending (%) 5.0% 4.0% 3.0% 2.0% 10% 1.0% 0.0% Targetted 5% blending 40 45 50 39 4.3% 40 2.8% 2.2% 30 20 2014-15 (Dec 14 t Nv 15) 2014-15 2015-16 2016-17 Ethanl Blending Percentage 10 0 Ex-distillery Price (Rs/litre) Ehtn nal Price (Rs/ litre) With the increase in realisatin t distilleries, abut 4.3% f Ethanl was blended against target f 5% 22
EBP Prgramme Recent Develpments Ex-distillery realisatin is Rs 45/litre Fixed pricing plicy Jan 15 t Nv 16 Ethanl being pursued as a renewable, envirnment friendly fuel and with bjective t imprve returns t farmers Price fixed as delivered at il depts. 3 price slabs, based n distance between distillery and il dept Ethanl exempted frm excise duty f 12.5% fr 15-16 SS Ex-distillery realisatin is Rs 36-37/litre Fixed pricing plicy Dec 16 t Nv 17 Ethanl being pursued as a renewable, envirnment friendly fuel Price fixed at Ex-supplier s factry price. Freight t be decided by OMCs. Decided freight by OMCs are nn-practical ranging frm Rs 0.10/litre t Rs 1000/litre depending upn lcatin f distillery. Ethanl excise exemptin withdrawn. State excise duties are t be brne by suppliers. Abve steps have increased ethanl ffers in 14-15 & 15-16 sugar seasn, when we have achieved highest ever blending 4.3% with petrl Withdrawal f excise duty exemptin, reductin in prices and nnpayment f state gvt. levies has lead t reductin in ethanl quantity ffers by distilleries (2.8% blending with petrl) 33
EBP Prgramme Pricing Dynamics The Cabinet Cmmittee n Ecnmic Affairs had apprved the mechanism fr revisin f ethanl price fr supply t Public Sectr Oil Marketing Cmpanies (OMCs) t carry ut the Ethanl Blended Petrl (EBP) Prgramme. Gvernment had als annunced that they will mve twards 'market dynamic' pricing system t align Ethanl price with glbal market. Fr the next sugar seasn 2016-17 during Ethanl supply perid frm 1st December, 2016 t 30th Nvember, 2017, the administered price f Ethanl fr the EBP Prgramme will be Rs.39/- per litre. Additinally, charges will be paid t the Ethanl suppliers s as per actuals in case f Excise Duty and VAT/GST and transprtatin charges as decided by OMCs. If the need arises t increase/reduce the retailsellingpricefpetrlbypublicsectr OMCs, then such increase/reductin wuld prprtinately factr in the requirement f maintaining the fixed cst f purchase f Ethanl during the Ethanl supply year. The prices f Ethanl will be reviewed and suitably revised by Gvernment at any time during the Ethanl supply perid that is frm 1st December, 2016 t 30th Nvember, 2017 depending upn the prevailing ecnmic situatin and ther relevant factrs. 44
EBP Prgramme Pricing Dynamics At the time f fixatin f ethanl price at Rs 39/litre in Nvember p p 2016, the retail selling price f petrl in Delhi was Rs 64.66/litre. Presently, Petrl is being sld by OMCs at Rs 71.33/litre i.e. retail selling price f petrl is increased by abut 10% in 3 mnths. The parity price f ethanl at current retail selling price f petrl cmes ut Rs 43.58/litre. SN Descriptin Unit Value As n 13th Oct 16 1 1 Retail sale price f petrl in Delhi Rs/litre 64.66 Declared basic administered ethanl 2 price Rs/BL 39.00 On 13th Feb 17 3 Retail sale price f petrl in Delhi Rs/litre 71.33 Increase in Retail sale price f petrl 4 frm PIB release Rs 6.67 Increase in petrl price excluding sales 5 tax Rs 5.25 Increase after impact f sales tax n 6 delivered ethanl Rs 5.15 Increase after impact f excise duty n 7 delivered ethanl RS 4.58 8 Parity basic price f ethanl Rs/litre 43.58 Nte: 1. The date f PIB release n Ethanl price fixatin & its mechanism Gvernment shuld cnsider a Mechanism fr peridic revisin f ethanl price linked with retail sales price f petrl. This may be frmulated similar t mechanism already in place fr price fixatin f PetrlandDieselevery frtnight based n India crude imprt basket. The same frmula may be extended t fix price f Ethanl fr EBP prgram linked t retail price f Petrl. 55
EBP Prgramme Barriers in Supplies Inter-State mvement & State Gvernment permissins: Inter-State NOCs frm imprting State States are impsing imprt/exprt duties n inter-state mvement f ethanl and thereby reductin in realisatin t distilleries. Restrictins/cntrls by States n inter- State mvement f ethanl Tedius prcedures fr inter-state sale and mvement Mnthly permissins issued by state authrities. Issuance f these permissins take 30-45 days in inter-state supplies. Delay in btaining i these permissins i result in penalties t the suppliers. Other State State Exprt Excise Imprt Duty VAT/CST Duty duties/ (Rs/litre) (Interstate) (Rs/litre) Taxes (Rs/litre) Andhra Pradesh 5.5% Bihar 50% 5.0% Delhi 2.0 Ga 0.35 Gujarat 3.0 Haryana 2.0 Karnataka 5.5% Kerala 0.56 Madhya Pradesh 1.5 2.0 0.3 Maharashtra 1.5 1.5 6.0% Odisha 0.35 Punjab 0.25 2.0 2.0% Rajasthan 1.0 2.0% Tamil Nadu 0.5 Uttar Pradesh 1.0 0.15 2.0% Uttarakhand 1.1 2.0% West Bengal 0.25 66
EBP Prgramme Barriers in Supplies Vide PIB release dated 13th Oct 16, The Cabinet Cmmittee n Ecnmic Affairs, Chaired by The Hn ble Prime Minister, has already annunced ex-factry ethanl price fr the suppliers at Rs 39/litre. It was als annunced thatt all ther taxes and duties shall be paid extra n actuals (refer pint ii f PIB release dtd 13th Oct 16) Net realisatin t ethanl suppliers is less by Rs 2 3 /litre frm the annunced price due t the tender terms n nn-payment f state excise duties (exprt/imprt/license fee etc.) Gvernment Psitin Extrardinary Ntificatin N. 31 dated May 14, 2016 issued by Ministry f Law and Justice, Gvt. f India, wherein item 26 under the first schedule f Industries (Develpment and Regulatin) Act 1951, wherein the Industries Under the cntrl f Central Gvt. have been spelt-ut, has been amended frm 26 Fermentatin Industries t 26 Fermentatin Industries (ther than Ptable Alchl) is under sle cntrl f Central Gvt. Letter N. 20 (45)/2014-SP-I (Pt.) dated December 21, 2016 issued by Jint Secretary t the Gvt. f India t the Chief Secretaries f all States specifying that nw, all issues pertaining t fermentatin industries (ther than ptable alchl) such as cntrl ver its licensing and regulatin f the manufacture, strage, acquisitin, pssessin, use, cnsumptin, transprtatin, trade and cmmerce, supply, distributin and its mvement including intra state and inter-state mvement theref, and the grant r issue f such licenses, permits r ther dcuments and charging/levying f fees, if any, etc. shall be under the exclusive cntrl f the Gvernment f India. Further, any such cntrl by State Gvernment (s) ver the field(s) indicated abve, including n intra state r inter-state mvement f industrial alchl ( i.e., ther than prtable alchl), r alchl fr EBP Prgramme, stand repugnant t the amendment, issued by the Central Gvt. vide amendment dated 14.05.2016 ( N. 27 f 2016) t the I ( D&R) Act, 1951 Payment f state excise duties (exprt/imprt/license fee etc.) n actuals. 77
Plicy Recmmendatins fr Ethanl Gvernment shuld cnsider a Mechanism fr peridic revisin f ethanl price linked with retail sales price f petrl. This may be frmulated similar t mechanism already in place fr price fixatin f Petrl and Diesel every frtnight based n India crude imprt basket. The same frmula may be extended t fix price f Ethanl fr EBP prgram linked t retail price f Petrl. Payment f state excise duties (exprt/imprt/license fee etc.) n actuals by OMCs r t be waived ff by state authrities. Restre excise duty waiver n Ethanl and pass n benefit t Ethanl manufacturers. Ethanl price shuld be fixed nt nly t cver its prducing cst, but shuld als give credit t Ethanl s prperty t cntrl pllutin and imprve air quality Imprves returns f farmers Reduces net il imprt bill 88
Thank Yu! 99