New Delhi, Oct. 22:
Pricing may play a spoilsport once again for the ethanol-blending programme. With sugar mills quoting a higher price for ethanol in the tenders floated for the new crushing season, the state-run oil marketing companies (OMCs) – IndianOil, Hindustan Petroleum and Bharat Petroleum – have decided to form a committee to fix a benchmark rate.
“The OMCs had received 80 technical bids for 133.24 crore litres of ethanol for the period starting December 2013 to November 2014. The price bids were opened recently and the rates quoted by the sugar mills are much higher than the realised price from the previous tender,” said an oil company executive, requesting anonymity.
The companies have decided to form a committee to discover a benchmark price for negotiating with the sugar mills, the official added. In the previous tender, the discovered weighted price for procuring ethanol was Rs 37 a litre on an ex-factory basis, while it was Rs 43 a litre for delivery at the depot of the OMCs. The oil marketers had finalised procurement of 55 crore litres in the previous tender.
On January 2, the government had set a June 30 deadline for state-run oil companies for a mandatory 5 per cent ethanol blending in petrol. The companies had missed this deadline. It is now estimated that the Government can save up to $340 million in 2013-14 by implementing the 5 per cent blending programme.
The latest tender is to procure ethanol from all States, except Uttar Pradesh, where it would be applicable between June and November 2014, as supplies for the earlier months have already been committed. The ethanol requirement of IndianOil Corp is estimated at 58.81 crore litres, followed by Bharat Petroleum at 38.10 crore litres and Hindustan Petroleum at 36.32 crore litres for the next season. Higher prices had earlier resulted in the Government directing the companies to scrap the international tender. The sugar industry says rates are expected to rise as overall costs have gone up.
Faced with a surplus sugar stocks, millers have demanded that higher blending of 10 per cent or more be allowed in top sugar producing states such as Uttar Pradesh, Maharashtra and Karnataka.