Oil firms float tenders to buy 260 Million Litre of ethanol

Lucknow, 1 June 2021

To achieve the pan-India fuel blending target of 8-8.5 per cent, the public sector oil marketing companies (OMCs) have floated tenders for procuring 260 million litres (ML) of ethanol from sugar mills during June-November 2021.

This is in addition to the earlier expressions of interest (EoIs) floated by the OMCs seeking ethanol supplies. The latest fourth cycle of EoI was floated by the OMCs on May 25, according to the Indian Sugar Mills Association (ISMA) today.

Against the total letter of intent (LOI) quantity of nearly 3.47 billion litres (BL) of ethanol, more than 3.21 BL had been contracted for and 1.45 BL supplied as of May 25, 2021. Of the total supply, about 77 per cent comprised ethanol made from sugarcane juice/B-heavy molasses.

India, on average, in the current ethanol supply year (ESY) 2020-21 has achieved a blending percentage of 7.56 per cent. The country achieved 8–10 per cent blending in most of the states except Rajasthan, Kerala, West Bengal, Assam, North-Eastern states, Kashmir and Ladakh.

To achieve a blending target of 8–8.5 per cent for the whole year by the end of November 2021 and progress to achieve 10 per cent blending, it is vital to increase blending level to 12 per cent in ethanol surplus as also adjoining states, ISMA suggested.

Meanwhile, Indian sugar mills have produced about 30.57 million tonnes (MT) of sugar between October 2020 and May 2021, which is 3.56 MT higher than the 27 MT produced in the corresponding period last year.

The mills in Uttar Pradesh (UP) have produced 11 MT of sugar, which is 1.55 MT lower than the 12.55 MT posted last year. Out of the total 120 mills, 116 units have ended their crushing operations. The current crushing season in the Western region of UP got prolonged as most of the jaggery/khandsari units had closed their operations following the lockdown, thus diverting a portion of the sugarcane to mills.

In Maharashtra, the crushing season has concluded and the state mills have produced about 10.6 MT of sugar, which is 4.4 MT higher compared to the 6.2 MT produced in the 2019-20 sugar season.

“There is a lot of talk about sugarcane availability and higher sugar production in the next season 2021-22. ISMA will obtain satellite images of the cane area across the country in the latter part of June 2021 to get an idea of the acreage available for harvesting next year. Accordingly, ISMA will discuss the same in its meeting attended by members from across the country, and in July 2021 make its preliminary estimates of sugarcane availability and sugar production for 2021-22,” an ISMA release read.

Citing port information and market reports, the Association said, about 5.8 MT of sugar export contracts against Maximum Admissible Export Quota (MAEQ) of 6 MT for 2020-21 fixed by the government, have already been entered into. It is also estimated that almost 4.5 MT would have physically got shipped out during Jan-May 2021.

In addition, the sugar industry had exported 448,000 tonnes in Oct-Dec 2020 quarter against the MAEQ of last season 2019-20.

Recently, the Centre had reduced its assistance from Rs 6,000 to Rs 4,000 per tonne of sugar for exports against MAEQ for 2020-21, citing the current global market scenario. The reduced assistance shall be applicable for that quantity of MAEQ for which the contracts/agreements are signed on or after May 20, 2021.

Moreover, amid continuously depressed ex-mill prices, it is learnt, that to maintain liquidity of funds and to generate adequate funds to be able to pay the full fair and remunerative price (FRP) to cane farmers, some mills are also exporting under open general licence (OGL) without any assistance.

(Virendra Singh Rawat is a Lucknow-based journalist who writes on contemporary issues of industry, economy, agriculture, infrastructure, budget etc.)