OMCs to save Rs 700 crore from ethanol blending even at higher price

Oil marketing companies (OMCs) are set to witness an accumulative gain of Rs 700 crore through blending of ethanol of its tendered quantity of 55 crore litre, experts said.

OMCs floated tenders to procure 110 crore litre of the green fuel for blending it with petrol few months ago and received overwhelming response. However, of the total quantity applied for, valid tenders were found of only 55 crore litres.

According to informed sources, the average price of ethanol ex-depot works out to Rs 38.53 a litre of ethanol compared with that of petrol, at Rs 44.80.

Considering a number of central and state levies, the price of green fuel at petrol pump works out to Rs 54.70 a litre as against that of petrol at Rs 67.29 a litre. As a consequence, the difference per litre stands at Rs 12.59. Ethanol, price is today effectively higher by around 30 per cent from its quoted price earlier.

Since, the green fuel is as pure as petrol and hence, directly blended for use, the price difference for OMCs would be their savings.

It is a win-win situation for both, said Narendra Murkumbi, managing director, Shree Renuka Sugars. While higher realisation would help sugar mills get their better financials and avoid selling of rectified spirit at lower price for use as potable alcohol, OMCs’ reliance on imported crude oil would decline to the extent of ethanol procured. The savings for OMCs would help them generate more profits going forward.

Use of ethanol as fuel will also act favourable for environment, he added.

Echoing similar response, Vivek Saraogi, managing director of Balrampur Chini, said, “The government’s decision to implement mandatory blending of ethanol with petrol will boost sugar mills’ profitability by 25 per cent in coming quarters.”