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Informist, Friday, Jan. 10, 2025

 

By Afra Abubacker

 

NEW DELHI – Oil marketing companies have given the highest supply orders for ethanol made from maize in the fourth quarter (Aug-Oct) of the 2024-25 ethanol supply year that started in November. Of the 934.4 million litres allocated, grain-based distilleries will supply about 73% and sugarcane-based units, the remaining 27% during the period, the results of the tender issued by oil marketing companies show. However, industry officials said grain-based distillers would mostly fail to fulfil the orders amid firm feedstock prices. 

 

"Certainly, there will be a supply shortfall. Feedstock prices (maize, damaged food grains) are unviable," S.K. Shukla, president of the Uttar Pradesh Distillers Association, said. "Maize is INR 26 a kg and above. Ethanol (production) is only viable if prices are INR 24 a kg," he said. 

 

Within the grain basket, around 543.4 million litres of ethanol will come from maize and 136.1 million litres from damaged food grains. Maize is also a sought-after feedstock for the poultry industry. "Maize fundamentals are absolutely tight and therefore there's a demand now for maize imports. Will we import maize? Big question," G. Chandrashekhar, a commodity expert, told Informist earlier. 

 

Meanwhile, within the sugarcane complex, about 183.9 million litres of ethanol will be sourced from B-heavy molasses, 68.3 million litres from sugarcane juice, and 2.7 million litres from C-heavy molasses. For the fourth quarter (Aug-Oct), B-heavy molasses is given higher allocation amid less availability of cane juice during the period. Cane-crushing season almost comes to an end by June. Ethanol is made from starch-containing feedstock like molasses and grains. 

 

"Even above DEPs (dedicated ethanol plants), cooperative mills are prioritised in this cycle," a sugar body official said. It is unclear if further tenders will continue to give preferential allocation, he said. "Cooperative sugar mills under the National Federation of Cooperative Sugar Mills shall be given first preference of allocation," the tender read. Dedicated plants have a valid long-term off-take agreement with the oil companies. 

 

This is the second round of ethanol orders in 2024-25. Previously, 8.37 billion litres of ethanol were allocated for the first three quarters of the ethanol supply year. So far, ethanol orders this year stand at 9.30 billion litres, and India needs 10.16 billion litres to achieve 20% blending by 2025-26 (Nov-Oct). In 2023-24, India achieved 14.6% blending. 

 

"Since FCI rice is now in the picture, distillers expect one more cycle," the official said. With surplus rice stocks, the government, on Wednesday, asked the Food Corp. of India to sell rice at INR 2,800 per 100 kg to distilleries till Mar. 31. Rice stocks with FCI were at 29.1 million tonnes as of Jan. 1, the highest in a decade for the month. Rice had piled up in government godowns as it banned exports in July 2023, which has since been reversed. 

 

"There is a lot of rice and the government wants to offload it," the official said. However, distillers say the rice off-take will be poor unless the government cuts rice prices to INR 2,100-2,200 per 100 kg from INR 2,800. 

 

Both cane and grain-based distilleries have been urging the government to hike ethanol rates, citing higher production costs. Currently, ethanol from damaged food grain is priced at INR 64.00 a litre. Ethanol from sugarcane juice is priced at INR 65.61 a litre, B-heavy molasses at INR 60.73 a litre, and C-heavy molasses at INR 56.28 a litre. Oil companies purchase ethanol from distilleries to blend the biofuel with petrol and achieve blending targets. End

 

Edited by Saji George Titus

 

 

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