A Group of Ministers (GoM) headed by agriculture minister Sharad Pawar would be meeting tomorrow to decide on price mechanism for bio-ethanol.
The government has fixed a provisional price of Rs 27 per litre for the oil companies to implement five percent mandatory blending of fuel with ethanol, a by-product of sugarcane processing.
A cabinet committee had referred the issue to the GoM after two government committees recommended different mechanisms for fixing the price.
The Prime Minister's Economic Advisory Council chairman C Rangarajan has asked the government to leave the price fixation to market forces whereas an expert committee headed by plan panel member Soumitra Choudhary has recommended ethanol price ranging between Rs 23-31.
The expert committee has also suggested chemical industry may enter into long-term contract with ethanol industry for supply of up to 50 crore litres per annum at approval price with right-of-first refusal for 20 crore litres per annum for both sides.
India had produced 220 crore litres of ethanol in 2010-11.