Highest ever ethanol blending expected in 2017-18

• Tenders were floated by the Oil Marketing Companies (OMCs), inviting bids from sugar companies and ethanol manufacturers for supply of ethanol in 2017-18 (December – November).

• Accordingly, the bids were submitted by 10^th November 2017 by the sugar companies and ethanol manufacturers for a total quantity of 155 crore litres. This is the highest ever quantity offered by the sugar companies and ethanol manufacturers.

• A total of 313 crore litres is required for 10% blending across the country and, therefore, the offers given were equivalent of replacing 5% of the country’s petrol consumption.

• Since the bids for several oil company depots were more than the required quantity of the depot for 10% blending therein, proportionate quantities have been accepted by the OMCs.  Accordingly, out of 155 crore litres of bids submitted by sugar companies and ethanol manufacturers, 113 crore litres have been finalized for supply during 2017-18 season.

• The best ever ethanol supplies were made in 2015-16 SS when 111 crore litres were successfully supplied and blended with petrol.  The 113 crore litres finalized now will be even higher to the record of two years back.  Further, as per past practice and experience, the OMCs may float a second round of tender for more quantities.  Considering that 42 crore litres as offered by sugar companies and ethanol manufacturers have not been accepted, one can be very sure that the 113 crore litres of ethanol supplies finalized will further go up by a significant quantity.

• Last year i.e. in 2016-17 (December – November), a total of around 66 crore litres has been lifted by the OMCs for the programme.  The jump from 66 crore litres to 113 crore litres for 2017-18 and that too only in the first round of tender is because of the following reasons:-

(a)              A pro-active Government of India and OMCs, taking several positive steps for procurement of ethanol,

(b)             Improvement in the ethanol procurement price for 2017-18 by almost 5% over last year.

(c)              Increase in sugarcane availability giving more molasses production.

(d)             Continuous pressure from Central Government on the States, including amendment of IDR Act 1951, to allow freer movement of ethanol and to withdraw taxes levied by States.

• At an ex-distillery procurement price of Rs. 40.85 per litre and procurement of the finalized quantity of 113 crore litres, the revenue realization during 2017-18 by the sugar industry/ethanol suppliers would be over Rs. 4500 crore.  This, in turn, will significantly help the sugar industry in making payments of cane price to the farmers.

• Out of the 113 crore litres finalized by OMCs, the largest quantity will be supplied by the sugar companies and ethanol manufacturers in U.P. to the tune of 44.3 crore litres followed by Maharashtra at 40.3 crore litres.  However, U.P. had offered to give 75.9 crore litres whereas Maharashtra offered to give 50.4 crore litres in their bids meaning thereby that a significant quantity will still be supplied from these two States, whenever a second tender is floated.

• As per the finalized quantities, the ethanol blending with petrol percentages will be excellent in the States of U.P. which should be achieving 9.6%, followed by Maharashtra which should be 8.6% and Bihar which should be achieving 7% during this season.