"OMCs to Secure 335 Crore Litres of Ethanol Annually from New Plants"

State-run oil marketing companies (OMCs) are set to bolster their ethanol procurement, with plans to acquire over 335 crore litres of ethanol from upcoming manufacturing facilities across eight states and two union territories.

The OMCs, including Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL), have initiated the Ethanol Procurement Group (OEPG), which has recently issued an expression of interest (EoI) to invite potential bidders for long-term off-take agreements with dedicated ethanol plants (DEP).

Under this initiative, OMCs aim to collectively procure 335.68 crore litres of denatured anhydrous ethanol annually from plants scheduled to commence commercial operations within two years from the signing of the offtake agreement.

The latest EoI, released on March 5, builds upon a previous initiative issued on February 9, which outlined the procurement requirements for 86.94 crore litres of ethanol from upcoming DEPs.

According to the new EoI, Rajasthan tops the list with an annual procurement target of 87.22 crore litres, followed by Tamil Nadu (55.79 crore litres), Gujarat (48.99 crore litres), Andhra Pradesh (45.37 crore litres), Odisha (34.75 crore litres), Telangana (32.41 crore litres), Kerala (16.50 crore litres), Goa (7 crore litres), and a collective procurement from Jammu & Kashmir and Ladakh (9.65 crore litres).

The EoI emphasizes the signing of Tripartite Agreements (TPA) with shortlisted bidders entering into long-term offtake agreements, facilitating access to finances from banks or financial institutions.

Interested project proponents, including public sector undertakings (PSUs) other than IOCL, BPCL, and HPCL, are encouraged to apply. Additionally, bidders who have established plants but have not commenced production are eligible to participate.

This initiative aligns with the ethanol blending programme (EBP), aimed at promoting biofuels, augmenting farmers' income, and reducing the country's crude oil import bill, which exceeded $157 billion in FY23.

OMCs have proposed competitive prices for ethanol, offering ₹56.28 per litre for ethanol derived from C-Heavy Molasses, ₹71.86 per litre for maize-based ethanol, and ₹64 per litre for ethanol produced from damaged food grains.

However, challenges persist, as the All India Sugar Traders Association (AISTA) predicts a potential decline in the ethanol blending target to 10 percent in the ethanol supply year 2023-24, down from 12 percent in the previous year. Despite this, India aims to achieve a blending rate of 15 percent under the EBP by 2023-24.

As per the AISTA presentation, India achieved an ethanol blending rate of 11.28 percent (147.6 crore litres) as of February 18, 2024, compared to 11.25 percent (114.5 crore litres) during the same period in the previous year.

HBL