Two executives at OMCs, however, said they are buying as much ethanol as is required to meet the target of blending 15% ethanol in petrol. "The stock at ethanol producers is rising as OMCs are unable to lift enough quantity," said an ethanol industry executive who didn't want to be identified. "This could be due to limited storage capacity at OMCs' depots," the person added. State-run oil marketing companies Indian Oil, Hindustan Petroleum, and Bharat Petroleum purchase ethanol from diverse producers to blend it with petrol at their depots before supplying the fuel to pumps.
These companies did not respond to ET's request for comment until press time Sunday.
But two OMC executives, who didn't want to be identified, said their firms were on course to meet the blending target of 15% for the current year. They said the current trouble in the ethanol industry was an outcome of rapid enhancement in biofuel production capacity in the country. Ethanol company executives confirmed massive capacity buildup in the industry. "A lot of ethanol production capacity has been added in recent years, but OMCs need a limited quantity to meet their 15% blending target for the current year," an ethanol industry executive said. "Next year, when they have a higher blending target of 20%, OMCs may procure more, easing the current supply-demand mismatch." The OMCs may by then also increase ethanol storage capacity at their depots, the executive added.
India's ethanol production capacity was about 13.80 billion litres per year in November 2023, of which 8.75 billion litres were molasses-based and about 5.05 billion litres grain-based, according to government data. The production capacity was about 4.20 billion litres in 2014.
Some ethanol industry executives also attributed the current problem to the government's decision to cap the quantity of B-heavy molasses - a byproduct of sugar production - that can be used as feedstock for producing ethanol this year in a bid to ensure adequate sugar availability. "OMCs haven't yet been able to collate the quantity of B-heavy molasses-based ethanol each distillery can produce and offer to OMCs," the executive quoted above said.
"Once that is done, OMCs may issue tenders for procurement of ethanol." Some ethanol producers are also unhappy with a recent policy of OMCs to give preference to ethanol suppliers from the same state where the depot is located, disregarding the distance between the depot and the distillery.
Disclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.
