As the Government ponders over various moves to conserve foreign exchange in the oil sector, the sugar industry has sought expediting tendering process for ethanol procurement to give the mandatory blending programme a push.
Despite Government mandate, public sector oil marketing companies had taken about 5-6 months to finalise the tender issued early this year, which not only delayed the mandatory blending initiative, but also made the sugar mills jittery.
As part of measures to contain outflow of foreign exchange on account of import of crude oil and petroleum products, Petroleum and Natural Gas Minister M. Veerappa Moily, in a letter to Prime Minister Manmohan Singh and the Finance Minister P. Chidambaram said that the Government can save up to $340 million in 2013-14 by implementing the 5 per cent mandatory ethanol blending programme.
The Ministry believes that if the overall consumption of petroleum products is retained at the previous year’s level against the 4.1 per cent growth originally estimated as a result of the measures suggested including no increase in crude oil imports by public sector /joint venture refiners, ethanol blending programme, demand in reduction of LPG, the reduction in forex outflow would amount to $7 billion approximately.
The Government, had, on January 2 notified the mandatory five per cent blending of ethanol with petrol to be achieved by June 30.
However, the delay in the tendering and procurement has impeded the blending initiative.
The OMCs have begun placing orders for only about 40 crore litres of ethanol against the finalised quantity of 55 crore litres, although the actual requirement for the mandatory 5 per cent blending is estimated at over 100 crore litres.
From December to November 2013-14, the OMCs have come out with a tender to procure 133.24 crore litres of ethanol. About 80 technical bids have been submitted for the latest tender, which is 15 per cent more than the previous one. The OMCs are currently in the process of evaluating financial bids.
“The OMCs should expedite the tendering process and complete it in a month or so. Also, they should go for higher blending of up to 10 per cent in States wherever ethanol is available,” said Abinash Verma, Director-General of the Indian Sugar Mills Association. Further, the OMCs should not reject any ethanol offered by sugar mills on price consideration, he said.
The latest tender is to procure ethanol from all States across the country, except for Uttar Pradesh, where it would be applicable between June and November 2014, as supplies for the earlier months have already been committed. The ethanol requirement of Indian Oil Corporation is estimated at 58.81 crore litres, followed by Bharat Petroleum at 38.10 crore litres and Hindustan Petroleum at 36.32 crore litres for the next season.
Blending of ethanol would also make available higher petrol for products. In states such as Uttar Pradesh, Maharashtra and Karnataka, where the availability of ethanol is more, higher blending of up to 10 per cent should be allowed.