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Realisations from ethanol for sugar companies is set to increase by up to a tenth as the Inter-Ministerial Group has agreed to revise the formula to fix the benchmark price.
The public sector Oil Marketing Companies have been procuring ethanol from the sugar mills to implement the mandatory five per cent blending programme.
Price realisation The current benchmark price for ethanol at ₹44 a litre is derived from the lowest refinery transfer price (RTP) or the cost of petrol to the oil marketing companies.
At its recent meeting, the ministerial group has agreed to consider the average of RTP for the previous financial year instead of the existing system, in keeping with the sugar companies’ demand.
This is expected to benefit the sugar mills. A Petroleum & Natural Gas Ministry official told Business Line that the realisations could go up by ₹1-2 litre, while the sugar industry expects an increase of up to ₹5/litre from the fresh tender to be floated in the next season starting October.
The ministerial group consists of officials from the Ministry of Petroleum and Natural Gas, Food and Public Distribution among others.
Maharashtra mills Sources said the move would entice sugar mills in Maharashtra to participate in the mandatory blending programme by offering ethanol to the Oil Marketing Companies. Mills from Maharashtra have largely stayed away from participating in the tenders of the oil companies and have preferred to sell in the open market due to the cumbersome process of securing their payments.
The companies have finalised offers for 65 crore litres of ethanol and so far, about 31.55 crore litres have been lifted by them.
The five per cent ethanol blending programme is being implemented in nine States, while Uttar Pradesh, and a depot in Bangalore, and two depots in Maharashtra have introduced 10 per cent blending with petrol. As part of its energy conservation strategy, the Government has launched ethanol-blended petrol programme.
However, blending of ethanol with petrol will have little impact on crude oil import, since petrol is only a by-product of the distillation process.
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