Don’t delay any more, warns sugar industry
After slowing to a mere 2.5 per cent last year, sugar mills are hoping for a recovery this year in the programme on blending of ethanol with petrol. Which also means the procuring refineries need to hurry.
There has been a significant increase in cane output and thereby proportionate improvement in the availability of extra-neutral alcohol (ENA), which is a derivative in sugar manufacturing and a pre-form of ethanol.
In November 2012, the Cabinet Committee on Economic Affairs ( CCEA) approved five per cent mandatory blending of ethanol with petrol, notified under the Motor Spirits Act in January 2013. It said all oil marketing companies (OMCs) had to record five per cent ethanol content in petrol by June 30, 2013, and 10 per cent thereafter.
Which has yet to happen. With weak supply orders on an unremunerative price, the three government-owned OMCs managed to achieve a maximum of 1,110 million litres, equivalent to four per cent blending, for the 2015-16 crushing season (November 2015 to October 2016).
During the just-concluded season of 2016-17, drought in parts of major sugarcane growing regions in Maharashtra and Tamil Nadu led to less output and, hence, lower availability of ENA. So, the mills were able to supply no more than 710 mn litres, equivalent to around 2.5 per cent of blending.
“This year, output in India’s two large cane growing states of Uttar Pradesh and Maharashtra is estimated to be significantly higher. Hence, crushing is expected to be more, resulting in higher quality of ethanol supply to the OMCs,” said Abinash Verma, director general, Indian Sugar Mills Association (Isma). The sugar industry believes blending will be over four per cent, the earlier peak, during 2017-18.
The First Advance Estimate from the Union ministry of agriculture puts sugarcane output at 337.69 million tonnes (mt) for 2017-18, from actual production at 306.72 mt the previous year, a rise of 10 per cent. Experts say the latest spell of rain would increase recovery in the standing crop. Hence, ENA output and conversion of ethanol might be proportionately higher.
However, caution the mills, OMCs need to float the ethanol procurement tender and finalise the quantity before November 30, when the ongoing supply tender ends. That means the procurement tender must be issued now, to have at least three weeks for sugar mills to apply for their likely supply. Price negotiation and finalising of orders require another three to four weeks.
“This means, the ethanol procurement tender needs to be floated today. Any delay and mills would also initiate talks with chemical and potable alcohol manufacturers, reducing what is available for OMCs,” said a senior industry official, on condition of anonymity.
Last year, Bharat Petroleum Corporation (BPCL) had floated an ethanol procurement tender on behalf of all three OMCs with the opening date on October 22 and due date of November 11, 2016. Because of the delay in floating it, the entire system of finalising the orders got delayed, resulting in less supply of ethanol. been more even last year. By then, sugar mills had contracted with potable alcohol manufacturers. And, were able to supply only 25 per cent of the tendered quantity of 2,800 mn litres last year, a leading supplier said.