OMCs increase ethanol requirement for blending by 55% for season 2019-20

Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL), Public Sector Enterprises floated the ethanol procurement tender for 2019-2020 today. For the current year 2019-20 the OMCs have floated a requirement to buy 5.11 billion liters of ethanol which is 55% higher than the preceding year which stood at 3.29 billion liters.

With a view to increasing blending of ethanol and reducing the import bills of crude, the Government has taken multiple steps including promotion of ethanol production from molasses/sugarcane juice/sugar syrup/ distilleries producing ethanol from damaged food grains such as broken rice, wheat etc. which is unfit for human consumption.

This will not only augment the financial conditions of the ailing sugar industry which have invested in boosting up the ethanol capacities but will also optimize the ethanol production capacities of their mills/distilleries which today is expected to give better returns than that from sugar.

It is to be noted that the Government recently approved fixing higher ethanol price derived from different raw materials under the EBP Programme for the forthcoming season 2019-20 during ethanol supply year from 1st December 2019 to 30th November 2020 where the prices of ethanol from C heavy molasses route was increased from Rs.43.46/litre to Rs.43.75 per litre, the price of ethanol from B heavy molasses route was increased from Rs.52.43/litre to Rs.54.27/litre, the price of ethanol from sugarcane juice/sugar/sugar syrup route was fixed at Rs.59.48 per/litre, additionally, GST and transportation charges were approved to be payable and the rate for ethanol derived from damaged food grains unfit for human consumption is fixed at Rs.47.63/litre.

Apparently, one paramount part in the tender for the season 2019-20 is that the OMCs for the first time has invited offers for North Eastern states, Sikkim and Assam and most interestingly Jammu & Kashmir. The development of J&K has been the focus of the Hon.Prime Minister after the abolishment of Article 370.

The Central Govt. has the vision to achieve 20% ethanol with petrol by 2030 and is moving in the same direction. Where ethanol provides an additional revenue stream for the sugar companies, besides sugar and bagasse-based power experts believe the production and optimization of ethanol will definitely aid sugar mills to become financially, however it in now onus on the sugar industry to step up and supply the required quantity.

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