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Ethanol supply: Oil cos to start price talks this week

Harish Damodaran

Bidding process completed; Nov 1 deadline may not be met


Pricing talks
There could either be a single price applicable across the country or maybe more than one rate, taking into account regional variations in molasses and rectified spirit realizations.
A number of new distilleries that are to supply ethanol have not got the Centre's environmental clearance.

New Delhi , Oct. 29

The public sector oil marketing companies will initiate final price negotiations for sourcing ethanol from sugar mills during the coming week.

It is learnt that the technical and financial bids for tenders floated by the oil marketing companies - for an aggregate quantity of 580 million litres - have so far been opened in all States, barring Punjab.

Mills have apparently quoted prices (ex-distillery per litre) between Rs 21.50 and Rs 22 in Uttar Pradesh; Rs 21.50-22.50 for Bihar, Jharkhand and West Bengal; Rs 21.50-23 in Karnataka; Rs 23 in Tamil Nadu; Rs 22.50-23.25 in Gujarat; Rs 24.20 in Maharashtra; and Rs 25 in Andhra Pradesh.

Bids evaluation

"Now that the formal bidding process is over, the next stage would be to evaluate the bids and try an arrive at a negotiated rate based on the quotes received.

This could either be a single price applicable across the country or maybe more than one rate, taking into account regional variations in molasses and rectified spirit realisations," sources said.

In case a single rate is arrived at, the oil marketing companies are bound to put pressure on the mills to supply at the lowest quote of Rs 21.50 per litre.

This is against the Rs 17.50 per litre price that was negotiated in the previous ethanol tender for nine States and four Union Territories.

"The final negotiations will kick-off from Monday, by which time the Punjab bids too would have opened," the sources added.

Either way, it seems unlikely that the November 1 deadline for initiating the nation-wide gasohol programme - involving doping of ethanol up to 5 per cent in petrol - would be met.

"November 15 would be a more realistic starting date," the sources noted.

No green signal

Meanwhile, there is an added complication.

A number of new distilleries that are to supply ethanol have not got environmental clearance from the Centre.

These include Bajaj Hindusthan's Rudauli, Gangnauli and Khambarkheda units, Triveni Engineering's Khatauli, Balrampur Chini's Mankapur, Dhampur Sugar's Asmoli, Simbhaoli Sugar's Brijnathpur and Seksaria Biswan Sugar's distilleries.

Distilleries are listed under number 23 of Schedule 1 of the Union Ministry of Environment & Forests' notification, dated January 27, 1994, covering projects requiring mandatory environmental clearance from the Central Government.

"In this case, the mills have obtained a PD-33 certification for their distilleries issued by the State Government, which is not enough. The oil marketing companies, too, have accepted their technical bids on the basis of the PD-33 certifications. These may, however, end up creating legal complications later on," the sources pointed out.

Related Stories:
Ethanol: TN sugar mills submit bids
Ethanol blended petrol from Nov. 1
Chemical industry worried over ethanol-blending plan
`Ethanol-blended petrol sale subject to availability'

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