Oil marketing companies (OMCs) plan to procure ethanol from sugar mills in order to blend it with petrol and in this regard they invited bids for 105 crore litre of ethanol from domestic and global suppliers in the sugar year ending October 2013.
Of the 55 crore litre offered by Indian sugar mills, 11 crore litre is finalized as this volume was offered at the lowest price.
In November 2012, the cabinet had made 5 percent ethanol blending mandatory petrol across the country mainly and directed oil companies to pay market rates for the by-product of sugar mills.
OMCs are expected to save around Rs 3 per litre by blending ethanol with petrol at the current ethanol prices, reports suggest.
Currently, ethanol price rules at 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, reports indicate. It is learnt that the earlier price of Rs 27 per litre was not remunerative for mills to sell the product to oil companies.
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, reports indicate.
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