At present, the government has fixed a provisional price of ethanol at Rs 27 per litre. This is the rate at which oil marketing firms procure ethanol from sugar mills to implement the mandatory 5 per cent ethanol blending with petrol.
"We will shortly decide on ethanol price and take the proposal for Cabinet approval this month itself," Abdullah told reporters on the sidelines of an international sugar conference in New Delhi.
The government had decided for a mandatory 5 per cent ethanol blending with petrol (EBP) programme in October, 2007.
However, the minister said, "We should move towards 10 per cent blending from next year."
In the 2011-12 marketing year (October-September), sugar mills have contracted to supply 600 million litres of ethanol to petrol firms at an ad-hoc price of Rs 27 per litre, according to industry data.
Last year, sugar mills had contracted 540 million litres but were able to supply only 300 million litres.
Planning Commission member Soumitra Chaudhari has suggested linking of ethanol price with international price of petrol, with a discount of 20 per cent.
Meanwhile, Agriculture Minister Sharad Pawar said: "I hope ethanol price issue, which is pending for long, will be resolved soon."
Indian sugar industry is fully capable of meeting the demand of potable alcohol and 10 per cent ethanol blending programme, he added.
Pawar said the sugar industry produces 26 million tonnes of sugar, 3.5 billion litres of alcohol and 2,300 MW power.