Admitting the Bhartia-group promoted petrochemical company India Glycols? (IGL) appeal, the Supreme Court on Monday issued notices to the Centre, the three oil marketing companies, the Indian Sugar Mills Association, and others, over the alleged bid rigging with respect to the Ethanol Blending Programme (EBP).
While deciding to examine the price determination issue, a bench headed by Justice AK Patnaik sought reply from the ministries of petroleum and natural gas, chemicals and fertilisers, and consumer affairs, food and public distribution, Indian Sugar Mills Association, oil marketing companies (OMCs) ? Indian Oil Corporation, Hindustan Petroleum Corporation, and Bharat Petroleum Corporation, National Federation of Cooperative Sugar Factories and the Competition Commission of India (CCI), on the programme in which alcohol is added to petrol.
IGL is engaged in manufacturing and marketing of ethanol-based chemical such as natural gums, industrial gases, etc. and is dependent upon ethanol as one of the basic inputs for running its core business. Ethanol, which is produced from molasses (a waste material of the sugar industry), has emerged as a potential alternative to fossil fuels, both as fuel as well as feedstock for various industries.
Challenging the fair trade regulator CCI?s decision to reject its appeal against the alleged bid rigging, IGL senior counsel Dushyant Dave alleged cartelisation by the sugar mills and termed the meetings between the oil companies and the mills for price discussion and fixation of ethanol for blending with petrol as ?anti-competition.?
This demonstrated abuse of their dominant position (by controlling among themselves the entire sugar/ethanol production in the country), IGL said, adding that the stakeholders coerced the government in accepting the purchase/sale price of ethanol as determined by the cartel. However, senior counsel Gopal Subramanium, appearing for the sugar body, said that OMCs were taking ethanol at the best possible prices.
Alleging that the difference in the market price and the ?cartelised price? of ethanol is between 15-30%, IGL said that with limited availability of molasses-based ethanol in the country, any diversion of ethanol ?shall adversely affect the very existence of the chemical industry in India.?
?The majority members of the Commission took the view that the said price, being ultimately agreed by the Cabinet Committee of Economic Affairs (CCEA), becomes an administered price and, therefore, not only a price tainted by sections 3 and 4 of the Competition Act, but also the said determination by CCEA being beyond the purview of the Act,? the appeal stated.
In November 2012, CCEA had approved mandatory 5% blending of ethanol with petrol and also directed that procurement prices would be decided between the buyer and the supplier.
After tenders for procuring ethanol were floated by the oil marketing companies in January last year, IGL and others had complained before CCI that there was joint tendering by the OMCs at the procurement end and identical pricing by sugar mills at the supply end.
