Oil Cos offer Rs 6.87/lit incentive on ethanol made from C-heavy molasses to shore up supplies
Government Petroleum Marketing Companies (OMCs) have increased the prices of ethanol made from C heavy molasses by Rs 6.87 per liter. After this increase, the price of ethanol made from C heavy molasses has become Rs 56.28 per liter, which till now was Rs 49.41 per liter. This price has been implemented for the ethanol supply year (ESY) 2023-24.
Harvir Singh
Government Petroleum Marketing Companies (OMCs) have increased the prices of ethanol made from C-heavy molasses by Rs 6.87 per liter. After this increase, the price of ethanol made from C-heavy molasses has become Rs 56.28 per liter, which till now was Rs 49.41 per liter. This price has been implemented for the ethanol supply year (ESY) 2023-24.
The decision has brought big benefits for the sugar mills. Sugar mills will get the increased price for ethanol made from C-heavy molasses only from the earlier date of November 1, 2023. But this price will be available only for the supplies for which supply orders have been issued for the ethanol supply year 2023-24. Sugar mills will benefit from this decision of the government. At the same time, due to an increase in the mills' earnings from ethanol, they will be in a better position to make payments to the sugarcane farmers.
This decision of the government to increase the price of ethanol produced from C-heavy molasses has been taken to continuously promote the Ethanol Blending Program (EBP). Recently, the government issued an order banning the production of ethanol directly from sugarcane juice. Which is being seen as a setback for the ethanol blending program.
Talking to Rural Voice about this decision of the government, Prakash Nayakanavare, Managing Director of National Federation of Cooperative Sugar Factories Limited (NFCSF), said that this decision has encouraged the industry and this step will encourage the sugar industry to produce more ethanol. He says that we had expected an increase of Rs 5 per liter but the government has given a better signal to the industry by increasing it by Rs 6.87 per liter.
Sugar mills produce ethanol directly from sugarcane syrup. Along with this, they make ethanol from B heavy molasses and C heavy molasses. Ethanol produced from these three has different prices. Ethanol made from C-heavy molasses has the lowest price. But the latest increase has made it attractive and sugar mills will use the molasses more for ethanol production rather than selling it to other industries.
According to information received by Rural Voice from industry sources, oil companies have signed supply contracts of 360 crore liters for the current supply year (2023-24) till December 10, 2023, out of which 52 crore liters have been supplied, whose blending average is 10.50 percent. Out of this, supply contracts for 218 crore liters of ethanol have been signed with the sugar industry and 22 crore liters of ethanol have been supplied from there.
The supply of ethanol made directly from sugarcane juice has been 17 crore litres, while contracts for 135 crore liters of ethanol have been signed under this. At the same time, four crore liters of ethanol have been supplied from B-heavy molasses. Contracts for 83 crore liters have been signed for this category of ethanol.
According to information received by Rural Voice, a letter regarding a price increase has been issued by DGM Biofuel at BPCL headquarters on behalf of oil companies IOCL, BPCL, MRPL, and HPCL. In this, the price increase has been called an incentive, and oil companies will pay this increase by including the incentive in the purchase order or through a credit note. This incentive is for ethanol produced from C-heavy molasses for the allocation made for ESY 2023-24. This increase does not apply to supplies made under allocation or purchase order of ESY 2022-23.
It said that the Food and Public Distribution Department of the Central Government had written a letter to the CEOs and Managing Directors of all sugar mills and distilleries on December 15, 2023, advising them to increase ethanol production from C-heavy molasses. "you are requested to produce more and more ethanol from C Heavy Molasses and supply more ethanol in the tenders issued by oil companies for ESY 2023-24," the letter noted.
Due to the ban on making ethanol directly from sugarcane juice, sugar mills can compensate for the allotted quantity through an additional supply of ethanol made from C-heavy molasses.
