New Delhi, April 23:

The Petroleum Ministry may have the final say in deciding the price at which public sector oil marketing companies (OMCs) source ethanol from global suppliers. This is because bids received from international suppliers are almost twice the price offered by the OMCs to domestic sugar companies.

The OMCs had invited bids for imports as they were facing a shortfall in domestic ethanol supplies, required for the mandatory five per cent blending with petrol. The Government, on January 2, had notified the mandatory five per cent blending of ethanol with petrol to be achieved by June 30.

The global bids, which were recently opened, had quotes ranging from Rs 72 to Rs 90 per litre, against the Rs 38-45 being offered by the OMCs to domestic companies for supply at their depots. The domestic price being offered is higher than the price of last year rates of Rs 32-35 a litre.

While the OMCs actually require about 105 crore litres of ethanol for blending, the domestic sugar industry has committed to supply 55 crore litres in the current sugar year-ending September. The cane crushing has almost ended for the current sugar year and the mills had already committed the supplies elsewhere before OMCs floated the domestic tenders for procuring ethanol in third week of January.

OMC sources said the evaluation of global tenders was still on and whether they would be willing to firm up sourcing at such prices would depend on what the Petroleum Ministry mandated.

Meanwhile, the letter of intent (LoI) for sourcing 11 crore litres of ethanol from the domestic sugar companies has already been issued. For the balance 44 crore litres, the process of issuing LoIs was still going on, sources said.

In the current sugar year, so far, molasses produced by Indian sugar mills are estimated at around 10 million tonnes.

Each tonne of molasses yields an average 250 litre of rectified spirit or alcohol or ethanol. About half of the estimated 250 crore litres is produced annually, and close to half of this is used for production of potable alcohol.