Indian sugar mills association

Ethanol blending to save 6 a litre for oil companies: Sugar mills

Date:	05 Jun 2013

Source:	The Economic Times

Reporter:	Shreya Jai

News ID:	2315

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NEW DELHI: Sugar mills say oil marketing companies (OMCs) can indeed save 6 for every litre of petrol sold if ethanol is blended with it, contradicting the OMCs' suggestion that blending will lead to costlier fuel. In a letter to the ministry of petroleum, Indian Sugar Mills Association (ISMA), a sugar industry lobby, has said oil companies are reluctant to buy ethanol from domestic producers which are capable of meeting 53% of their annual requirement. Oil companies have said they could secure less than a third of their requirement from domestic sources and will have to rely more on costly imports. They feared that petrol price will go up if costly imported ethanol is blended with it. "Against an annual requirement of 105 crore litre for the mandatory 5% blending, ethanol manufacturers offered 55 crore litre in the tender. However, even after four months, orders have been issued by the OMCs for around 25 crore litre only," said the letter reviewed by ET. Sugar mills said they are ready to supply 55 crore litre of ethanol and more if a supplementary tender is floated as cane crushing for this season will start in October. ISMA has forecast 50 crore litre of ethanol production in the current season. "The moot point is that 53% of the current annual requirement made available domestically will give savings to OMCs of around Rs6 per litre. Further, a supplementary domestic tender for additional supplies from October-November 2013 could fulfil most of the OMCs' balance requirement," said the letter. Prices offered by domestic producers are in the range of Rs38-49 per litre. Government sources said oil companies procured a low volume because the prices offered by ethanol producers was "unviable". Last month, state oil firms bought 10 crore litre of ethanol at a price of Rs42 per litre. The price of imported ethanol is around Rs70-90 a litre. Sugar mills are requesting the government that OMCs procure a major volume from domestic sources and the rest from abroad. The Cabinet Committee on Economic Affairs has made 5% ethanol blending mandatory in petrol sold after 30 June.

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