The public sector oil marketing companies (OMCs) have opened tenders for import of ethanol. They hope the imported product will help them meet the shortfall in domestic supplies, used for the mandatory 5 per cent blending with petrol. This is even as the domestic sugar mills, which had bid for the tenders floated by OMCs in January, eagerly await orders from them to start supplies.
While the OMCs require about 105 crore litres of ethanol for blending, the sugar industry has committed to supply 55 crore litres in the current sugar year — ending September. To make up the gap, the OMCs decided to go in for global tenders, which opened on Tuesday, an official said.
Mandatory blending
The Government, on January 2, had notified that the mandatory 5 per cent blending of ethanol with petrol was to be in place by June 30.
Though the OMCs came out with tenders for domestic ethanol some time in the third week of January, the tendering process is not yet complete, and orders are yet to be placed.
As the current sugarcane crushing season 2012-13 entered the last phase, the delay in placing of orders by the OMCs has left the millers worried. The Indian Sugar Mills Association recently wrote to Petroleum Minister M. Veerappa Moily, seeking his intervention in speeding up the tendering process.
Meanwhile, the oil companies say they follow a two-bid system. Once the tenders are opened, there is a gestation time to complete the process — there is a technical evaluation, followed by a financial assessment. Only after these processes are completed will the lowest bidder be awarded the contract.
Molasses storage
As for the sugar companies, the delay in receiving orders from the OMCs has created storage issues as they have produced 85-90 per cent of the molasses.
Struggling to handle molasses storage, several sugar mills have committed sugar supplies to other uses, such as cattle-feed and production of industrial alcohol. Some factories in Maharashtra have reportedly exported certain quantities of molasses to the European Union for cattle-feed.
In the current season so far, molasses produced by the Indian sugar mills has exceeded 9 million tonnes. Each tonne of molasses yields an average 250 litres of rectified spirit or alcohol or ethanol. Of the estimated 250 crore litres produced annually, close to half is used for production of potable alcohol.