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Confusing signals on bio-fuels

The bio-fuels policy, which was quoted in the media as a done deal, has been retracted and a complete review of it is being undertaken. This is a very good development, as the policy, in the form in which it was, sent very confusing signals as regards its purpose and the intended beneficiaries. To the cynical, the policy reflects a desire to provide income ‘protection’ to the sugar industry vis-à-vis its role in ethanol production or a mechanism by which the under-recoveries of the oil marketing companies can be contained by facilitating access to cheaper blending options. The cynics may be justified in their views, given the policy’s focus on the minimum procurement price of bio-fuels and the use of molasses for ethanol production.

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