Tender for supply of 2.67 billion litres ethanol issued by OMCs

India’s Oil Marketing Companies (OMCs) have put out a second tender for the procurement of a massive 2.67 billion litres of ethanol for the 2023-24 ethanol supply cycle.

This time, bids were specifically requested for ethanol derived from C-heavy molasses, maize, and damaged food-grains, with a deliberate exclusion of ethanol sourced from B-heavy molasses and sugarcane juice, processes known for significant diversion of sugar content.

The ethanol supply period typically spans from November to December. In the initial tender issued in October 2023, OMCs sought bids for the supply of 8.25 billion litres of ethanol from various sources to meet the 15 per cent blending mandate. Bids were invited for ethanol derived from sugarcane juice, sugar, syrup, B-heavy molasses, C-heavy molasses, damaged food grains, maize, and surplus rice sourced from FCI.

Anticipating a decrease in sugar production this year, the government is exploring all avenues to bolster ethanol supplies. Recent weeks have shown noticeable improvements in production, with industry estimates projecting an output ranging around 31 million tonnes, up from the previous estimate of 29 million tonnes.

Records indicate that in response to the October 2023 tender, OMCs received bids for approximately 5.6 billion litres of ethanol, which accounted for around 64 per cent of the tendered volume. Trade sources reveal that 2.67 billion litres were committed from sugarcane-based molasses, while the remainder originated from grains.

In the 2022-23 period, C-heavy molasses contributed 0.06 billion litres to the total ethanol supplied to OMCs. Ethanol production in India encompasses various sources, primarily sugarcane or grain-based molasses. Sugarcane-derived ethanol includes sugarcane juice, syrup, B-heavy molasses, and C-heavy molasses.

Industry experts note that ethanol production from sugarcane juice or syrup results in the highest sugar diversion, a percentage that decreases when produced from B-heavy molasses and is nil in the case of C-heavy molasses.

In response to the cessation of ethanol production from sugarcane juice, OMCs have announced significant increases in the procurement price of ethanol from maize and C-heavy molasses, aiming to maintain the blending program’s momentum without adversely affecting sugar supplies.