OMCs provide financial support to ethanol traders to accelerate blending

To encourage sellers to maximize ethanol stocks, state-run oil marketing companies (OMCs) will offer them monetary compensation of between Rs 1,179-2,337 per kiloliter (KL) for six months until November.

The move will help OMCs reduce their marketing losses (underfunded) due to increased crude oil prices, which are currently stuck between Rs 18-21 per liter for petrol and diesel. It will also accelerate the plan to double ethanol blending from now 10% to 20%.

The need for additional ethanol is all the more necessary now that Indian basket prices have reached a ten-year high of $121.28 a barrel and are likely to rise further. OMCs, on the other hand, are handicapped when it comes to raising prices, in support of the government’s efforts to contain high inflation.

In a message to sugar mills, OMCs said the monetary support scheme would apply to all deliveries of ethanol billed to them between June 1 and November 30.

“The amount of the exemption will be paid by the respective OMCs upon completion of each quarter for the supplies invoiced by the seller in that quarter. Applicable GST of 5% will be paid on the amount of the waiver,” they said.

However, they said there would be no change in the base price of ethanol (set by the government) of various raw materials and that the applicable rates on the bills should be maintained.

“To take advantage of the waiver amount, suppliers will issue separate invoices for the waiver amount upon completion of each quarter,” they said.

OMCs offer Rs 1,604/KL monetary relief for cane juice/sugar or sugar syrup based ethanol, Rs 1,493/KL for B heavy molasses based ethanol and Rs 1,179/KL for C heavy molasses.

Ethanol produced from damaged food grain will draw Rs 2,337/KL financial relief. For excess ethanol based on rice, the amount is Rs 1,437/KL.

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