Sugar ind ready to support ethanol-blending drive

Offers 1,000 million litres ethanol to OMCs.

The sugar industry has offered to supply around 1,000 million litres ethanol to oil marketing companies for blending it with petrol. This is more than the 860 million litres required for blending the government-prescribed five per cent ethanol with petrol.

The highest quantity of 120 million litres has been offered by Renuka Sugars, while Bajaj Hindusthan has offered to supply 100 million litres. Balrampur Chini is learnt to have offered close to 40 million litres. These companies will realize an interim price of Rs 27 per litre fixed by a group of ministers. A final price will, however, be decided by an expert committee.

Among the states, the highest quantity has been offered by Maharashtra (390 million litres), followed by Uttar Pradesh (280 million litres) and Karnataka (160 million litres). The remaining quantity has been offered by states including Tamil Nadu, Andhra Pradesh and Gujarat.

The OMCs — Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation — are likely to issue supply orders to the sugar companies on September 6. No supply offers have been made by the sugar industry for the states of West Bengal, Orissa and Chhattisgarh. The oil companies are likely to make arrangement for these states from states reporting surplus supplies.

According to industry sources, the blending programme can start in a month’s time. Even though the next sugarcane crushing season will begin in October, some companies have carry-over stocks and can begin immediate supply of ethanol.

The ethanol blending programme continued for about two years before coming to a halt in October last year due to low supply on account of fall in sugarcane output. Against a demand of 1,800 million litres for the 2006-2009 period, the sugar industry supplied only 585 million litres.

Consequently, in the latest round, the OMCs have insisted on stringent penalty clauses for non-supply or default by sugar companies.

Ethanol is considered a ‘green’ fuel and its blending with petrol will also help reduce India’s heavy dependence on crude oil imports. Some OMCs also have plans to start ethanol production themselves. Hindustan Petroleum Corporation, for instance, bought two sick sugar mills in Bihar in 2008 to produce ethanol. These mills will start producing ethanol in December.