Oil marketing companies have invited fresh bids from sugar companies to fulfill its requirement of 99 crore litres of ethanol for supplies from 1st July to 30th Nov 2020. This will help cash strapped sugar mills to liquidate their sugar inventory as government has asked millers to divert sugar and sugarcane for ethanol production.
“Only millers from Uttar Pradesh can supply ethanol as mills and Karnataka and Maharshtra are closed. Millers are estimated to supply 20 crore litres as against the requirement of 99 crore litres,” said a food ministry official.
For this season, OMCs have invited bids for 511 crore litres in August last year, 253 crore litres in January 2020 and again 253 crore litres in March this year. The season runs from December to November.
The government has mandated blending of 10% ethanol with fuel by 2022. Oil marketing companies had raised a requirement for 511 crore litres of ethanol for this year.
“Out of the total requirement, bids for around 190 crore litres have been finalised so far. Of this 76 crore litres have been supplied. Now OMCs have raised requirement of additional 99 crore litres of ethanol for their blending programme during July-November,” the official said.
Low ethanol supply from sugar mills has jeopardised the government’s target of 10% ethanol blending with fuel. In 2018-19, India achieved a blending target of around 5 per cent.
“This year also, the blending percent is likely to be the same. The government aims at achieving 20% blending by 2030, which looks difficult considering the present level of ethanol supply,” the official said.
The government is planning to more than double ethanol production and increase blending of ethanol with petrol. This is likely to reduce the country’s oil imports by 2 million tonnes annually and reduce the oil import bill by Rs. 7,000 crore.
It plans to enhance ethanol production capacity to 9 billion litres from 3.55 billion litres in two years.
“For this, it has given in-principle approval to 362 new plants in sugar mills for adding capacity of 5.5 billion litres. This will require an investment of Rs 18,000 crore,” said the official, who did not wish to be identified.
He said the country needs at least 4.25 billion litres of ethanol to meet the 10% blending target.
“We are targeting to divert at least 7 million tonnes of surplus sugar in each of the next two years for ethanol production to maximise profitability of sugar companies,” he said.
According to ISMA, a trade body of sugar mills, this year the sugar production is likely to be 27 million tonnes, out of which 26.82 million tonnes have already been produced.
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