OMCs float tender to supply 8.25 billion litres of ethanol in FY24

Oil Marketing Companies (OMCs) have floated tenders for the supply of 8.25 billion litres of ethanol from all sources for the FY24 supply year that will start from November 1, which is required to meet the 15 per cent blending target for the period.

The bid document was floated a few days back, and the validity of the bids was till July 31, 2024.

“Ethanol produced from different feed stocks, namely Sugar Cane Juice, Sugar, Sugar Syrup/B Heavy Molasses/ C Heavy molasses /Damaged Food Grains/Maize/ Surplus Rice sourced from FCI, is being procured by OMCs and the same has been mentioned in the quantity bid form. Bidders must offer their total quantity under the respective feedstock for the respective period,” the offer document said.

In the FY23 ethanol supply year (ESY), the OMCs had floated tender documents for the supply of 6.51 billion litres of ethanol from all sources. Of this, till the end of July, around 3.51 billion litres of ethanol had been supplied by sugarcane- and grains-based ones.

Of this, around 82 per cent came from sugarcane-based sources while the rest came from grain-based sources.

Sources said that against the target of 12 per cent average annual national blending in the FY23 supply year, around 11.76 per cent was achieved till a few weeks back.

As per the official plan, India plans to reach a 15 per cent average annual national blend by the FY24 supply year that starts from November 1, followed by an 18 per cent blend in FY25 and finally a 20 per cent blend in FY26 supply year.

“The ethanol industry is set to expand by a staggering 500 per cent, and by 2025, as we move towards a 20 per cent blending level, demand is expected to soar to 10.16 billion litres, propelling the industry's worth from Rs 9,000 crore to over Rs 50,000 crore,” said Vijay Nirani, Founder & Managing Director at TruAlt Bioenergy.

He said the tender for the supply of 8.25 billion litres of ethanol for Ethanol Supply Year FY24 by OMCs means India is poised to achieve the milestone of surpassing a 15 per cent blending rate with petrol.

“This tender itself stands as a strong indicator of India's dedication to reaching the ambitious 20 per cent ethanol blending target and pushing beyond," Nirani said.

Meanwhile, the Centre is likely to increase the price of ethanol produced from sugarcane-based molasses for the next FY24 season starting from November 1 by up to 3 per cent, in line with the trend followed since the last few years, trade and industry sources recently said.

Though there has been no official announcement, industry sources said it could happen before the start of the new season from November 1, 2023.

The FY23 Ethanol Supply Year will end on October 31, a month ahead of the earlier schedule to align the same with the sugar production season.

Sources said that for ethanol produced from ‘B-heavy molasses’, the procurement price could be raised by Rs 1.15 a litre, while for that produced from ‘C-heavy’ molasses it could be raised by Rs 1.75 per litre and for that produced from sugarcane juice, syrup, or sugar, the price could be raised by Rs 2.25 per litre from what has been prevailing in the FY23 season that ends on October 31, 2023.