The three oil marketing companies (OMCs) - Indian OilCorporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) sought bids from ethanol manufacturers by January 12 to procure 97 crore litres of sugarcane extract for mixing in petrol.
Sugar millers have been asked to quote quantities they can offer, according to the tender document.
The tender follows the Cabinet Committee on Economic Affairs' (CCEA) decision on December 10 on fixing the delivered price of ethanol in the range of Rs 48.50 per litre to Rs 49.50 per litre, depending upon the distance of sugar mill from the depot/installation of the oil firms.
This rate was higher than Rs 44 to 48 per litre price quoted in a July tender seeking ethanol supplies for the period from November 2014 to October 2015, industry sources said.
Since then only 37.42 per cent out of the 1,599 thousand kilolitres (TKL) of ethanol sought was tendered, a revised expression of interest (EoI) was floated on October 21 for 1200 TKL with an indicative location-wise benchmark price ranging between Rs 44 to 48 per litre.
However this tender was scrapped as retail selling price of petrol had been cut by Rs 7.24 a litre in the previous two months and procuring ethanol at Rs 44 to 48 per litre was seen economically unviable.
Since then petrol price have been cut further and the cumulative reduction now stands at Rs 12.27 per litre and it remains to be seen how the oil marketing companies will make ends meet with a higher ethanol procurement price.
Oil firms had procured ethanol in the range of Rs 39 to Rs 45 per litre during December 2013 to November 2014, they said.
The government had in 2003 started the programme to blend 5 per cent ethanol in petrol. This was extended to the entire country except North Eastern States, Jammu and Kashmir, Andaman and Nicobar Island and Lakshdweep by November 2006.
However, the oil firms faced difficulty in procuring ethanol and not all the required quantity was offered by sugar millers. The programme was then made voluntary.
Oil firms had in October 2010 fixed ethanol price of Rs 27 per litre which was revised only last year.

Announcing the new price, an official release had stated that "the present mechanism of procurement of ethanol based on a benchmark price may be replaced by a new mechanism of uniform price of ethanol declared for each sugar year."
It said that the ex-sugar mill price of ethanol is around Rs 42.02 per litre which after adding duties and transportation cost came to around Rs 49 a litre, it had said.

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