Request to Release PRC Penalty to Premier Alcobev Pvt. Ltd. and Shamanur Sugars Limited
The All India Distillers’ Association (AIDA) has reached out to Indian Oil Corporation Ltd. (IOCL), urging the Oil Marketing Companies (OMCs) to release penalties under the Price Reduction Clause (PRC) and security deposits to Premier Alcobev Pvt. Ltd. and Shamanur Sugars Limited, both affiliated with AIDA. This appeal comes in light of the cessation of FCI rice supplies for ethanol production, causing financial strains on the mentioned companies.
In their communication, AIDA highlighted the contractual provision allowing OMCs to impose penalties under the PRC if supply levels fall below specified thresholds. Premier Alcobev Pvt. Ltd. had previously requested the release of PRC from HPCL due to ethanol supply disruptions caused by FCI rice cancellations in the 2022-23 period.
Shamanur Sugars Limited also faced challenges, necessitating a switch from FCI rice to maize for ethanol production due to supply uncertainties. The company, in its correspondence with BPCL, outlined the increased costs and supply constraints resulting from the FCI rice halt and regional raw material shortages.
This development follows the Government’s decision in July 2023 to halt FCI rice supplies to grain-based distilleries for ethanol, impacting the industry’s supply chain and prompting strategic adjustments to alternative feedstocks.
