Rs 27 a litre. Moreover, producers were suffering huge losses as the volume also drops by around 5% if you process the rectified spirit further to produce fuel ethanol. But if OMCs (oil marketing companies) buy at market prices and the blending plan is implemented strictly, the sugar industry will benefit greatly, as ethanol producers would have fixed buyers each year,” said a senior industry executive.
The country's ethanol production rose 8% in 2011-12 from a year earlier to 283.8 crore litres while demand stood at 279.6 crore litres, of which the requirement by OMCs accounts for nearly 30%. Although mandatory ethanol blending was introduced in 2008, only 13 states have implemented the programme and the average blending is just 2%. If the mandatory blending programme is now strictly implemented, OMCs would require around 100 crore litres a year.
OMCs say that as long as ethanol is priced lower than petrol, they don't have any problem implementing the blending programme. Indian Sugar Mills Association director general Abinash Verma said the industry has the ability to meet the entire ethanol requirement of OMCs if it gets the market price.