Ethanol supply to oil firms to touch record 140cr litre: ISMA

New Delhi: Ethanol supply to oil marketing companies for blending with petrol will jump over two-fold in 2017-18 season at record 140 crore litre, helping sugar mills to earn Rs 5,700 crore revenue, according to ISMA.

Around 66 crore litre of ethanol was lifted by OMCs (oil marketing companies) for the ethanol blending programme in 2016-17 season (December November). The previous record was 111 crore litre in 2015-16.

Indian Sugar Mills Association (ISMA) attributed the jump in ethanol supply to improvement in ethanol procurement price by almost 5 per cent over last year and increase in sugarcane availability giving more molasses production.

"After two rounds of offers, counter-offers and negotiations between sugar factories/ethanol manufacturers and OMCs, against the first tender invited in November 2017, 140 crore litres of ethanol supplies have been finalised for the supply period 2017-18," ISMA said.

Maharashtra will supply 50 crore litres in 2017-18 as against only 7.5 crore litres supplied in 2016-17 season. This is because of higher availability of sugarcane and molasses, as well as better price for ethanol approved by the Centre.

Uttar Pradesh will supply maximum 55 crore litres to the oil depots within the state as well as the neighbouring States of Haryana, Punjab, Delhi, West Bengal etc. Last year, UP supplied 41 crore litres ethanol.

The third largest state supplying ethanol is Karnataka, where over 18 crore litres of ethanol supplies have been finalised by the OMCs.

It is expected that 10 per cent ethanol blending would be achieved in the states of Uttar Pradesh and Maharashtra during 2017-18 sugar year," the statement said.

In Delhi, Telangana and Uttarakhand, blending level would be 8.9 per cent, 8.1 per cent and 8.7 per cent respectively.

"At an ex-distillery rate of Rs 40.85 per litre of ethanol being offered by the OMCs and as approved by the Government of India, the sugar mills and ethanol manufacturers would get around Rs 5,700 crore this year from sale of ethanol," the statement said.

This will be a big help to the sugar mills in paying the cane price to the farmers in their region.

"The requirement for 10 per cent blending, shown by OMCs, was 313 crore litres and, therefore, the 140 crore litres of ethanol supplies finalised should allow the country to reach 4.5 per cent ethanol blending with petrol consumption in 2017 -18," ISMA said, adding that 5 per cent can be achieved as some more quantities could be supplied.

Sugar production of India, the world's second largest producer, is estimated to rise at 25.1 million tonne in the 2017-18 marketing year as against 20.3 million tonne in the previous marketing year ended September.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.