After two rounds of offers, counter-offers and negotiations between sugar mills/ ethanol manufacturers and oil marketing companies (OMCs), against the first tender invited in November 2017, 140 crore litres of ethanol supplies have been finalised for the supply period during the sugar season (SS) 2017-18 (December–November), Indian Sugar Mills Association (ISMA) said in a statement released today.
The highest ever ethanol supplies made, was in 2015-16 contract period (December – November), of 111 crore litres of supply amounting to almost India’s 4% of petrol consumption, ISMA said.
This 140 crore litres of ethanol finalised now is 26% higher to the best ever supplies of 111 crore litres made in 2015-16, the sugar mills body further said.
The highest increase in ethanol quantities finalised is from the State of Maharashtra, which has finalised over 50 crore litres of ethanol supplies during 2017-18. Due to drought last two years in Maharashtra resulting in lower sugarcane cultivation and molasses availability, only 7.5 crore litres could be supplied in 2016-17 season. The 50 crore litres now finalised to be supplied from Maharashtra is more than six times the supplies made last year. This is because of higher availability of sugarcane and molasses, as well as the better price for ethanol approved by the Government, ISMA said in the statement.
According to the sugar mills body, Uttar Pradesh, nevertheless, continues to remain the highest ethanol supplying State in the country where 55 crore litres have been finalised to be supplied to the oil depots within the State as well as the neighbouring States of Haryana, Punjab, Delhi, West Bengal and in some other States. This 55 crore litres is 34% higher to the 41 crore litres supplied last year in 2016-17. This increase is due to higher sugarcane and molasses availability in the current year as well as better ethanol prices approved by the Government.
The third largest State supplying ethanol is Karnataka, where over 18 crore litres of ethanol supplies have been finalised by the OMCs. The sugar mills and the ethanol manufacturers in the three largest States, namely, UP, Maharashtra and Karnataka, will now together supply 123 crore litres out of the 140 crore litres finalised by the OMCs, contributing for almost 88% of the country’s ethanol supplies, the statement noted.
It is expected that 10% ethanol blending would be achieved in the States of Uttar Pradesh and Maharashtra during 2017-18 sugar year. In the State of Delhi, Telangana and Uttarakhand, we should be achieving 8.9%, 8.1% and 8.7% blending levels respectively, which again would be record blending percentage, the sugar mills body estimated.
According to ISMA, at an ex-distillery rate of Rs. 40.85 per litre of ethanol being offered by the OMCs and as approved by the Government of India, the sugar mills and ethanol manufacturers would get around Rs. 5,700 crore this year from sale of ethanol. This will be a big help to the sugar mills in paying the sugarcane prices to the farmers in their region, ISMA expected.
The requirement for 10% blending, shown by OMCs, was 313 crore litres and, therefore, the 140 crore litres of ethanol supplies finalised should allow the country to reach 4.5% ethanol blending with petrol consumption in 2017-18. Further, there are some more quantities which can be supplied, as and when another tender is invited around February 2018. Therefore, there is a very bright chance of achieving 5% ethanol blending with petrol this year.
However, the sugar mills body emphasised that one important step that several State governments need to take is removal of the taxes and duties from denatured ethanol as also the unnecessary controls that the State Excise Departments exercise on movement of fuel grade denatured ethanol, which are beyond the State powers. Legislative and legal powers on denatured ethanol meant for blending with petrol is clearly and only with the Central Government, which should be accepted by the State governments, like what the Karnataka government has already done in July 2017.