India has achieved the highest ever ethanol blending of 8.1 per cent with petrol in the just concluded 2020-21 (December-November) supply year, the government claimed today.
However, sugar companies said that going forward proposed investments in the ethanol blending programme could suffer as Oil Marketing Companies (OMCs) have been creating artificial hurdles of late, preferring maize over sugarcane and rice as feedstock and giving priority to new producers over established ethanol manufacturers.
“In the ethanol supply year of 2020-21 (Dec-Nov), 3.03 billion litres of ethanol has been supplied by the distilleries to the OMCs, which is historically the highest. The supply of ethanol was only 0.38 billion litres with blending levels of only 1.53 per cent in 2013-14 which has increased by eight times in the last seven years,” the food ministry said in a tweet today.
It said that the government is committed to achieve a blending target of 10 per cent in the current ethanol supply year of 2021-22 (Dec-Nov).
Sugar companies meanwhile, in a letter addressed to Prime Minister Narendra Modi few days ago, welcomed the steps taken by the government to achieve 20 per cent blending target by 2025, but said some recent conditions by the OMCs for delivery of ethanol where in direct contravention of the stated policies of the department of food, finance and petroleum and could seriously impact the proposed investments by them in the sector.
Sugar firms in the letter alleged that in recent times it has been seen that OMCs have shown a preference for distilleries that produced ethanol from maize as against those that produced from sugarcane and rice which is contradictory to the government’s stated policy of encouragement to all raw materials to make ethanol and not to show preference for any particular feedstock.
That apart, they said that the OMCs are discouraging the “existing” ethanol manufacturers by prescribing conditions which would prioritize new ethanol manufacturers over the existing ethanol suppliers, including even if they have already signed contracts to supply ethanol to the OMCs.
“This is highly confusing and discriminatory, not only for the sugar companies and cooperatives, but also for all the existing ethanol manufacturers in the country,” sources said the mills said in the letter addressed to the Prime Minister.
Elaborating further, a senior industry official said that in the letter it has also been highlighted that one major prerequisite of getting soft loans for distillery expansion put by the banks is that the companies should have firm commitment of ethanol purchase from the OMCs and secondly the expansion should be approved by the department of food and consumer affairs.
However, off late it has been seen that some OMCs have released a list of sugar companies with which they want to enter into a Long-Term Purchase contract of 10 years for ethanol which are not in the list approved by the Food Department.
“Therefore, these companies (which included some existing ethanol makers from sugarcane) have been automatically disqualified to get bank loans as per the standard operation procedure,” the official alleged.
He also alleged that in some places it has been seen that OMCs have entered into Long-Term Sale contracts which is discriminatory to the major sugarcane producing states of UP and Maharashtra.
| Qty Required Vis-à-vis ethanol pdtn capacities | Requirement of Ethanol | Installed Capacity Requirement | Current Installed Capacity (2021) |
| From sugarcane & molasses | 6-6.5 | 6.5-7 | 5.25 |
| From grain and corn | 4-4.5 | 5-5.50 | 0.75 |
| Total | 10.50 | 12 | 6 |
The above news was originally posted on www.business-standard.com
