Sources say mills offer 112 mln ltr ethanol to oil cos in 3rd round

Friday, Jul 3, 2020


By Preeti Bhagat


NEW DELHI – Sugar mills have offered to supply 112.43 mln ltr of anhydrous denatured ethanol to state-owned oil marketing companies in the third round of bidding which ended on Jun 22, two sources close to the development said.


State-owned oil marketing companies had invited expressions of interest to purchase around 990 mln ltr of the biofuel in June.


"Demand is there from oil marketing companies because India has to achieve a certain blending target by 2022 but there are limitations with mills… Capacities are still expanding," an official with one of country's largest sugar manufacturing company told Cogencis.


"…whatever feedstock I have, I can produce that much ethanol only," he said.


Of the ethanol offered by sugar mills in the third round, 42.51 mln ltr is likely to be derived from B-heavy molasses and 44.28 mln ltr from C-heavy molasses, the official said. He said 5.45 mln ltr of the biofuel would be derived from 100% cane juice and 20.1 mln ltr from damaged foodgrains.


The ethanol will have to be supplied during the Jul-Nov period.


In the last two tenders floated by oil companies for supply of 5.11 bln ltr of anhydrous denatured ethanol in 2019-20 (Dec-Nov), mills are under contracts to supply 1.7 bln ltr of the biofuel. Of this, mills have already supplied 925 mln ltr of the biofuel as of Jun 22.


Bharat Petroleum Corp, Indian Oil Corp, and Hindustan Petroleum Corp buy ethanol from sugar mills at fixed prices as it is mandatory to blend petrol with the biofuel.


As of Jun 22, the rate of ethanol blending in petrol in India is at 5.09% currently, the Indian Sugar Mills Association said.


To increase the level of blending and boost production of the green fuel, the Centre last year raised prices at which oil marketing companies would buy ethanol from sugar mills.


The government increased the price of ethanol made from B-heavy molasses to 54.27 rupees a ltr for 2019-20 (Dec-Nov) from 52.43 rupees a ltr in 2018-19, and that of ethanol made from 100% cane juice and C-heavy molasses to 59.48 rupees a ltr and 43.75 rupees a ltr, respectively.


The government has also allowed oil marketing companies to buy ethanol made from sugar syrup at the same price as that made from cane juice.


Increased diversion of sugarcane towards ethanol would help India reduce the sugar glut in the market. The country is likely to start 2020-21 (Oct-Sep) sugar season with carryover stock of 11.5 mln tn sugar.


ISMA expects sugar production to reduce by 1.5 mln tn next year because of diversion of cane juice and B-heavy molasses for producing ethanol.


In 2020-21 (Dec-Nov) ethanol season, the Centre expects sugar mills to supply 3.0-3.5 bln ltr of ethanol to oil marketing companies to achieve 7.5-8.0% of ethanol blending in petrol.


As per the National Biofuels Policy 2018, the government aims to achieve ethanol-petrol blending rate of 10% by 2022 and 20% by 2030.  End


Edited by Aditya Sakorkar


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