Six large private sector sugar mills are set to benefit with the oil marketing companies placing ethanol orders for the ethanol-blended fuel programme.
In addition, two cooperative sector sugar mills are also set to participate, according to official sources.
In Tamil Nadu, six private sector sugar mills — Sakthi Sugars, Thiru Arooran Sugars, Rajshree Sugars, Kothari Sugars, Dharani Sugars and E.I.D.-Parry — and the two cooperative sector sugar mills are licensed to produce ethanol in the distilleries linked to sugar mills.
The total installed capacity is about 320 kilolitres (kl) of ethanol a day, according to official statistics.
They will benefit from the new revenue stream provided the pricing is right, according to industry sources.
Two of the three oil marketing companies, BPCL and IOC, have placed orders with the sugar mills and orders are awaited from HPCL, the sources said.
Delay in current season
For the 2011-12 sugar season, the programme is set to take off for just the last two months of the sugar year — August and September.
The oil marketing companies had tendered for ethanol in mid-May with sugar mills expected to supply 23,400 kl of ethanol at Rs 27 a litre up to September 30. But due to delays just about 5,960 kl, about a third of expected supply, will happen for the current season, sources said.
Sugar mills’ representatives are hopeful that the programme will continue in the coming year.
The oil marketing companies floated a tender earlier this month for the 2012-13 season and sugar mills participated in the tender that ended on August 14.
Sugar mills have tendered to submit about 34,500 kl of ethanol, about one-fourth of the installed capacity.
This is based on the State Government’s allocation of molasses for ethanol production while maintaining the quantity needed to make potable alcohol for the liquor industry.
Competition from liquor industry
Sugar mills, too, have adopted a sober approach to ethanol supply for the fuel programme as prices are higher in the liquor segment.
For instance, extra neutral alcohol, the raw material supplied for the liquor industry, fetches Rs 32 a litre. Oil marketing companies have to match the price for the industry to take interest, said sources.
The representatives are hopeful that the prices will be revised.
Overall, the decision to relaunch the ethanol programme is a welcome move, they say. Ethanol production facilities have been idling in recent years and are now being put to use.
This marks the revival of the ethanol-blended fuel programme after it was suspended in 2006 in Tamil Nadu. The Union Government notified the programme in September 2002.
The Tamil Nadu Government permitted the production of ethanol for fuel blending from January 2003. Till December 2006 when the programme was suspended, sugar mills supplied 106 lakh litres out of the total permitted 185 lakh litres.