OMCs raise procurement price of ethanol produced from C-heavy molasses

New Delhi: The three state-run Oil Marketing Companies (OMCs) — Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) — have announced a Rs 6.87/litre increase in the procurement price of ethanol produced from C-heavy molasses for the ethanol supply year (ESY) 2023-24, which started last month. The increase marks the highest rise in the procurement price in more than five years.

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"In order to maximise #ethanol production from C molasses route and improve the overall availability of ethanol for #EthanolBlendedPetrolProgramme, Public Sector Oil Marketing Companies announce an incentive of Rs 6.87 per litre for ethanol from C heavy molasses. C molasses is a by product of sugar factory and its utilisation for ethanol production is an effective way to promote #GreenEconomy," said the Ministry of Petroleum and Natural Gas in a tweet on Friday.

Procurement price of C-heavy molasses ethanol now at Rs 56.28/litre

The procurement price of ethanol sourced from C-heavy molasses was at Rs 49.41 per litre in the previous ESY (2022-23). After factoring in the increase, the procurement price would be Rs 56.28 per litre. The increase in procurement price comes weeks after the Centre stopped sugar mills from producing ethanol from sugarcane juice for 2023-24 due to concerns over India's sugar production during the year.

Ethanol prices now stands at Rs 64 a litre from damaged rice, Rs 66.07 from maize, Rs 56.28 per litre from C-heavy molasses and Rs 60.73 per litre from B-heavy molasses.

C-heavy molasses accounted for 1% of ethanol production last ESY

During ESY 2022-23, OMCs floated tender for the procurement of 599.7 crore litres of ethanol, against which Letters of Intent (LoIs) for 567 crore litres were issued. While sugarcane juice accounted for 25 percent of the total ethanol production, B-heavy molasses accounted for 45 percent, C-heavy molasses accounted for 1 percent and foodgrains accounted for 29 percent.

According to sources, OMCs will be looking to procure 5.62 billion litres of ethanol, out of which 47.86 percent is expected to come from B and C-heavy molasses, while the rest will come from grains. India's sugar production in ESY 2023-24 is estimated to be around 29 Million Tonnes (MT), down from 33 MT produced in ESY 2022-23.

ISMA President says industry appreciates increase in procurement price

"The industry appreciates the incentive of Rs. 6.87 per litre on supply of ethanol from C Heavy Molasses that takes the price to 56.28 per litre. However, I also believe that it should be further increased to help the industry navigate better in these uncertain times and ensure timely cane price payments, mitigation of losses and help augment ethanol production. Not to mention, the high interests that the industry is paying for investments in the increase of ethanol production capacity that is now not being utilised fully," M Prabhakar Rao, President of ISMA, said.

He also reiterated the industry’s appeal to ban export of molasses with immediate effect and the fact that we await further increase in price of ethanol from B-heavy molasses and sugarcane juice.

OMCs targeting 15% ethanol blending in 2023-24

According to the Ministry of Petroleum and Natural Gas, the OMCs achieved 12 percent ethanol blending in ESY 2022-23, up from 10 percent in ESY 2021-22. In ESY 2023-24, the oil retailer are targeting to achieve 15 percent ethanol blending.

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