OMCs float fresh tender for procurement of 133 crore litres of ethanol for blending

Oil marketing companies have floated a fresh tender for procurement of 133 crore litres of ethanol for blending with petrol for additional quantities for the period December 2013 to November 2014.

Petroleum minister M Veerappa Moily today informed the Lok Sabha that OMCs will procure ethanol from domestic sources to achieve the mandatory requirement of 5% ethanol blending with petrol by October, 2013 in areas of the country where sufficient quantity of ethanol is available.  In other parts, blending may be increased progressively depending upon the availability of ethanol to reach the mandatory level.  The new tender was floated on July 22.

The government has launched Ethanol Blended Petrol (EBP) Programme in November 2006, in the entire country except the North Eastern states, Jammu & Kashmir, Andaman & Nicobar Islands and Lakshadweep.    

Blending of ethanol with petrol will have very little impact on import of crude oil, since petrol is only a by-product of the distillation process and overall blending of ethanol is limited to 5%.  Moily added that the procurement price of ethanol will henceforth be decided between OMCs and ethanol suppliers.  

The first tender was floated in January, for an annual requirement of 105 litres for 5% blending. About 64 vendors who participated in the tender offered 55 crore litres of ethanol. But the second global tender by OMCs were less lucrative due to higher prices quoted in the range Rs 69.50 – 92 per litre for 62 crore litres from four suppliers.

According to an INDSEC Securities and Finance report, the availability of ethanol is not the issue in India. With 5% mandatory blending India will require 871 million litres of   Extra Neutral alcohol (ENA) for blending with petrol while India  is expected to produce 2170 million litres of ENA in 2012.

As on August 3, OMCs have issued 218 letters of intends for 32.72 crore litres and 199 Purchase Orders have been placed for 29.42 crore litres, out of which 2.30 crore litres of ethanol has been received by the OMCs.