Oil marketing companies float a second tender for ethanol supply

But, no mention of ethanol from cane juice and b-heavy molasses

Oil Marketing Companies (OMCs) have floated a second tender for the supply of 2.67 billion litres of ethanol in the 2023-24 supply year.

This time, however, bids were invited only from ethanol produced from C-heavy molasses, maize and damaged foodgrains.

This means ethanol produced from B-heavy molasses and sugarcane juice (both the processes in which the highest quantities of diversion of actual sugar take place) has been discouraged.

The ethanol supply year typically runs from November to December.

In the first tender for ethanol supply in 2023-24, which was floated in October 2023, OMCs sought bids for the supply of 8.25 billion litres of ethanol from all sources to meet the 15 per cent blending target.

The OMCs sought bids for ethanol produced from all feedstock namely sugar cane juice, sugar, syrup/B Heavy Molasses/ C Heavy molasses /Damaged Food Grains/Maize/ Surplus Rice sourced from FCI.

The production of sugar is expected to be less this year which has prompted the government to tap on all avenues to boost supplies.

There has been visible improvement in the last few weeks on the production front, the industry is now talking of output being in the range of 31 million tonnes as against 29 million tonnes earlier.

Documents show that against the first tender floated in October 2023, OMCs received bids for the supply of around 5.6 billion litres of ethanol (around 64 per cent of the tendered quantity).

Trade sources said 2.67 billion litres has been promised from sugarcane-based molasses while the balance came from grains.

C-heavy molasses contributed 0.06 billion litres of the total quantity of ethanol supplied to the OMCs in 2022-23.

Ethanol is produced from multiple sources in India. It is largely through sugarcane or grain-based molasses and other sources as feedstock.

In sugarcane, it is either through sugarcane juice or syrup, then B-heavy molasses and C-heavy molasses.

According to industry players, when ethanol is produced from sugarcane juice or syrup directly, the maximum amount of actual sugar is diverted.

This percentage of diversion is less when ethanol is produced from B-heavy molasses.

The ethanol produced from C-heavy molasses is where no sugar gets diverted in the process.

After stopping the production of ethanol from sugarcane juice, the OMCs have announced hefty hikes in procurement price of ethanol from maize and C-heavy molasses (that diverts the least amount of sugar) to ensure that the blending programme is on track while sugar supplies too aren’t impacted by much.