State oil firms to buy 11cr litre of ethanol at Rs 42/L

NEW DELHI: State oil firms will immediately purchase 11 crore litre of ethanol from sugar mills at the market price of Rs 42 a litre, significantly higher than the earlier price of Rs 27 but the blending of the alcohol with petrol will still remain profitable, oil and sugar industry officials said.


The government has made it compulsory for them to sell ethanol doped petrol from June. With the current rates, oil firms such as Indian Oil, Bharat Petroleum and Hindustan Petroleum will save almost Rs 3 per litre on petrol if they sell it in blended form, oil companies officials said. Oil companies had invited bids for 105 crore litres of ethanol from domestic and global suppliers for blending with petrol in the sugar year ending October 2013.

Indian sugar mills offered 55 crore litres, of which 11 crore litres have been finalized as this volume was offered at the lowest price.

“Companies have finalized purchase of ethanol from domestic producers but the quantity is not sufficient. They have also opened price quotes from overseas on April 1 to meet the demand. Imports of ethanol will also take place simultaneously,” a government official with knowledge of the matter said.

Last year in November, the Cabinet had made 5% ethanol blending mandatory petrol across the country mainly and directed oil companies to pay market rates for the by-product of sugar mills.

Earlier, its rate was fixed at Rs 27 per litre, which was not remunerative for mills to sell the product to oil companies. Sugar industry is hopeful that oil firms will issue another purchase order soon as the current procurement is less than the total quantity they had offered.

“The terms of calculation by oil companies is confusing and we are waiting for the letter of intent from them that will explain the quantity procured, which suppliers were selected and on what grounds,” said a Delhi-based sugar major. National Federation of Co-operative Sugar Factories, however, appreciated the price offered.