Ethanol manufacturers bat for Rs 40 per litre

Ethanol manufacturers have welcomed the Centre’s decision on five per cent mandatory blending with petrol but with riders. They have demanded a payment of Rs 40 per litre considering the current rate of alcohol of Rs 37 a litre and Rs 5,500 to Rs 6,000 a tonne of molasses. Besides, ethanol manufacturers want consistency in procurement from the oil marketing companies (OMCs). The Ethanol Manufacturers Association of India, has conveyed to OMCs that they would be able to supply 1,016.6 million (mn) litre by end-October next year.

Vijaysinh Mohite-Patil, president of the association told Business Standard, “The all-India ethanol production capacity is 1,620 mn litre of which Maharashtra has maximum with 928 mn litre. According to the government’s decision, at the all-India level total requirement of ethanol up to October 2013 would be 1,016.6 mn litre. This is doable. However, we want OMCs to pay Rs 40 per litre. We have been repeatedly pursuing the (matter of the) rise in ethanol procurement prices with OMCs.” During 2011-12, ethanol producers had incurred a loss of Rs 5 a litre as the production cost had increased to Rs 32 a litre against the procurement price of Rs 27 a litre.

Mohite-Patil said there has been a stiff rise in the prices of alcohol and molasses in Maharashtra, in particular, due to the fall in sugarcane production following drought conditions. “It won’t be possible for ethanol producers, not only in Maharashtra but also in other states, in such circumstances, to supply ethanol at Rs 27 a litre, especially when the cost of ethanol production has surged to Rs 36.50 to 37 a litre. Therefore, there is a need for OMCs to pay Rs 40 a litre,” he added. Mohite-Patil recalled that about 35 ethanol producers had shown their intention to supply 48.2 mn litres during 2012-13 at Rs 37 a litre.

OMCs had forwarded its letter recommending ethanol producers’ demand to the Cabinet Committee on Economic Affairs. An OMC official, who did not want to be named, admitted that all OMCs would jointly review the Centre’s five per cent ethanol blending programme and decide upon the future course of action. “The government’s decision is in the right direction. There were hiccups in the past but the programme will be implemented as several issues have been addressed. OMCs will jointly review the Centre’s decision and issue the tender, if required. The price will be quoted in the tender,” the official informed.