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Informist, Wednesday, Jan. 29, 2025

NEW DELHI – Oil marketing companies have fixed the price of ethanol made from surplus rice bought from Food Corp. of India at INR 58.50 per litre in ethanol supply year 2024-25 (Nov-Oct), unchanged from last year, according to tender released Wednesday. "The basic rate of ethanol procured by OMCs from FCI Rice shall be 58.50 Rs/Ltr. Transportation charges and GST shall be paid extra," the tender said.

Distillers buy surplus rice from FCI to make ethanol. Last year, FCI had halted supply of rice for fuel production due to concerns of lower rice production.

Though the government removed the ban on supply of rice by FCI for ethanol production in August, distillers found the rates uneconomical. To attract distillers and offload stocks, the government reduced FCI rice price to INR 22.5 per kg, from INR 28 per kg. The stock of rice at FCI godowns as on Jan. 1 was 29.1 million tonnes, the highest for a month in a decade.

The government has asked FCI to sell 2.4 million tonnes of rice by the end of March for ethanol production. FCI will start selling rice to distillers once oil companies allocate ethanol supply quantities, an FCI official said. Unlike before, FCI will not auction its rice for ethanol production but sell it directly to distilleries at INR 22.5 per kg, an FCI official said. "Rice will be directly sold to distilleries, not under OMSS (open market sales scheme) auctions," the official added.

"Distilleries along with a copy of signed contract with OMCs regarding supply of ethanol may approach the FCI Depot of their choice," the tender said. "FCI will allocate the rice as per the quantity of ethanol allocated to distilleries in their contracts with OMCs," according to the tender.

The market expects robust offtake of FCI rice by distillers amid firm demand for grain-based feedstocks to make ethanol. So far, state oil marketing companies have floated two ethanol supply tenders and grain-based distilleries have bagged the most orders. Of the orders for 9.30 billion litres of ethanol, grain-based units will supply nearly 64%, and sugar-based distillers 36.3%.  End

Reported by Afra Abubacker

Edited by Ashish Shirke

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