Sugar mills seek third ethanol supply tender from govt-owned OMCs

Sugar mills have urged government-owned oil marketing companies (OMCs) to float the third tender for ethanol procurement because of the expectations of excess production of the green fuel on additional quantity of cane being crushed this season.

The excess production is a major issue as mills had planned to expand ethanol production. With Uttar Pradesh being the largest sugar producer, mills in the state took the lead in urging for another tender.

In a letter addressed to three government-owned OMCs — Indian Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL), the apex industry body, Indian Sugar Mills Association (ISMA), urged to float a fresh ethanol procurement tender to help sugar mills/distilleries supply more green fuel for blending with petrol and reducing the oil import bill proportionately.

Over the last few years, the government has encouraged sugar mills/distilleries through policy support to supply ethanol to OMCs and fixed a target to achieve 20 per cent of blending in a couple of years.

"There are a few sugar mills/distilleries which are eager to supply more ethanol to the OMCs in the current year. It is therefore requested a fresh expression of interest (EoI) may be floated at the earliest to accommodate such sugar mills/distilleries," said Abinash Verma, director-general, ISMA.

The OMCs had floated a second tender for ethanol to supply the petrol-blending programme. 

They want a total of 2.53 billion (bn) litre, for supply between February 1 and November 30. In response to the first tender, floated in September 2019, the mills offered less than a third of what the OMCs asked for.

Of the 5.11 bn litre asked for in the first one floated in September last year, mills contracted to supply only 1.56 bn litre.  This was because of estimates of a decline in production this year, following lower cane supply.

The third round of the second cycle of EoI floated in January this year is now over and the OMCs could finalise a total quantity of approx 1.85 bn litre of ethanol for 2019-20.
 

ISMA has urged the OMCs to consider a five-day window in the beginning of every subsequent month where without an EoI, sugar mills /distilleries which have set new capacities or expanded their existing capacity or which want to supply more ethanol, can express their interest/give offers during this period.