OMCs to spend ₹100 cr extra on ethanol purchase after rates hike
After the Centre approved a hike in ethanol prices that could result in ₹100 crore additional expenditure by oil marketing companies (OMCs) and increase the open market demand for rice and maize, experts in the sugar industry have sought a curb on molasses export. Molasses could have been converted to ethanol domestically.
According to industry sources, grain-based distilleries have contracted to supply 21.25 crore litres of ethanol to be made out of damaged/broken rice and 0.08 crore litres to be made from maize in the current ethanol supply year ending October 31. However, the distilleries have supplied only 9.52 crore litres of ethanol made from damaged rice and no supply made from maize until July 31. Supplies of both these grains are stretched.
Additional sops
After the two rounds of additional incentives announced by the government over and above the ethanol price set for the year, the distilleries will receive extra ₹8.46/litre when ethanol made from damaged rice and additional ₹ 9.72/litre for the biofuel made from maize for the remaining 11.81 crore litres to be supplied after August 22.
On the other hand, export of molasses in the first quarter of the current fiscal has been recorded at 2,83,598.19 tonnes worth ₹361 crore whereas in the entire 2022-23 fiscal it was 16,08,906.7 tonnes worth ₹2,034 crore, official data show.
“Had there been restriction on molasses export, India could have produced 6.7 crore litres from the volume exported during April-June. The maximum quantity exported during crushing season and a decision restricting export should be taken before November as there has also been concern on sugarcane output due to prolonged dry weather in June-July in Maharashtra and Karnataka,” said a sugar industry official.
The country could have produced 38 crore litres of ethanol from the molasses volume that was exported during 2022-23 fiscal, the official said, adding the government should at least allow export of value-added products from molasses rather than as a raw material.
12% blending target
Countries such as the Netherlands, Philippines, Vietnam, South Korea and Italy are the top five destinations of Indian molasses which are used for cattle feed manufacturing, an expert said.
Fearing of missing the 12 per cent blending target, distilleries have got second hike in rates of ethanol purchased by oil marketing companies (OMCs) in a span of 15 days. With effect from August 22, ethanol prices stand at ₹64/litre (from damaged rice) and ₹66.07/litre (from maize), up by 15-17 per cent from the rates fixed for the season.
Until July 31, the OMCs had achieved 11.77 per cent blending since ethanol season started from December 2022. But it dropped by a tad to 11.75 per cent until August 15 due to closure of many distilleries following discontinuation of ₹20/kg rice from the Food Corporation of India. The Government has shortened the current ethanol season to 11 months as from 2023-24 season, it has been changed from November to October.
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