Fixing ethanol price

Thursday July 02, 2009

ISLAMABAD: The Ministry of Industries and Production is said to be manipulating to fix ethanol price, on behalf of some manufacturers, sources in the Ministry told a local English daily. The Cabinet has imposed 15 percent regulatory duty (RD) on export of ethanol, a demand by a powerful lobby backed by the Industries Ministry. The benefit of this RD, as was expected, is reportedly nil.

The Industries Ministry has already been strongly criticised by Pakistan Sugar Mills Association (PSMA) and Ministry of Commerce (MoC) for attempting to increase recently imposed 15 percent regulatory duty on molasses in a blatant effort to benefit ethanol manufacturers.

The imposition of regulatory duty will harm trade relations between Pakistan and the European Union (EU), as exporters have finalised several memoranda of understanding (MoUs) with EU partners and, therefore, the date of effectivity of the regulatory duty will have impact on these agreements.

Sources said that opponents of this duty proved with facts and figures that the logic of value-addition given by the ethanol manufacturers was far from reality. Last year, sugar mills exported 10,774,98 tons of molasses, which is equal to 25,237 tons of ethanol.

Analysts say that imposition of RD on molasses export will have a negative impact on Pakistan's exporters who will have to cancel deals with their European buyers, and renegotiate with them. The money earned from export of molasses was much higher than the ethanol manufacturers earned through so-called value-addition.