OMCs not lifting enough ethanol in some states: ISMA

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March 2, 2021 2:50 AM

“Sugar mills are “facing difficulties in lifting of ethanol by OMCs”, even though they have allocated about 325 crore litres of supplies in 2020-21. It seems that OMCs and their depots are not fully geared up, especially in newer depots and states, to take more quantities of ethanol,” Abhinash Verma, director general of ISMA, said.

oilIndian refiners have raised spot purchases from 20 per cent a decade back to 30-35 per cent of the total oil bought now.

The hike in petrol prices has affected ethanol supplies from sugar mills across the country. The Indian Sugar Mills Association (ISMA) has said oil marketing companies (OMCs) in some states do not seem to be fully geared up to take more quantity of ethanol.

“Sugar mills are “facing difficulties in lifting of ethanol by OMCs”, even though they have allocated about 325 crore litres of supplies in 2020-21. It seems that OMCs and their depots are not fully geared up, especially in newer depots and states, to take more quantities of ethanol,” Abhinash Verma, director general of ISMA, said.

In a letter submitted to the secretary, Department of Food, ISMA has said around 292 crore litres of ethanol supply contracts have been signed for the current supply year 2021, which have been allocated among various depots across the country. However, ethanol suppliers are not receiving monthly indents on time from depots and the oil companies for supplies as per the contracts.

The industry body said ethanol suppliers have competed among themselves to get depots closer to their manufacturing facilities, not only to reduce cost of transportation, but also to reduce the turnaround time of tankers and early payment for their ethanol. “However, due to some wrong calculation of demand by the OMCs, significant quantities of contracts already signed for several depots in the country are being relocated to other depots. The whole purpose of competing to get depots of own choice gets defeated,” the association said.

Sugar mills said they are incurring losses to the extent of Rs 3-5 per litre for such long-distance transportation of ethanol.

Sugar mills in Maharashtra have also complained that they have been able to supply only 50% of the allotted quota of ethanol to OMCs because of storage. The Western India Sugar Mills Association (WISMA), an umbrella body of private sugar mills in Maharashtra, said mills have been able to supply only 10.52 crore litres to OMCs, against an allotted quota of 28 crore litre in the first quarter.

Ethanol tankers have been made to wait outside the OMC facilities for 7-8 days since the OMCs do not have enough storage in their depots. The OMCs have said their offtake has reduced due to a hike in petrol prices and their storage tanks are full. Therefore, they will be able to purchase ethanol only as per availability of storage,” BB Thombare, president, WISMA, said. “This has also led to full capacities in distilleries. At least 10 distilleries in the state have been forced to shut down operations since their storage is full,” he said. The state has been allotted 108 crore litres in the 2020-21 season, he said. Maharashtra had supplied 38 crore litres of ethanol in the 2019-20 season.

Sanjay Khatal, MD, Maharashtra State Cooperative Sugar Factories Federation, agreed that there has been a delay in unloading both due to storage as well as decline in petrol sales.

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