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Oil marketing companies fail on ethanol lifting commitments, blending programme targets likely to fall short

“To achieve 10% blending target at pan India level, there is a need to ensure that enough tankage capacity is available with the OMCs,” he says and adds that priority of allocation of inter-state supplies should also be rationalized by OMCs.“To achieve 10% blending target at pan India level, there is a need to ensure that enough tankage capacity is available with the OMCs,” he says and provides that precedence of allocation of inter-state provides must also be rationalized by OMCs.

While the central authorities has launched a variety of coverage initiatives to promote its bold ethanol blending programme (EBP) goal of attaining 10% blending in petrol by 2022 and 20% blending by 2025, enormous miscalculations by oil marketing companies (OMCs) are threatening to jeopardise the programme.

According to sugar trade sources, due to the encouragement and incentives offered by the federal government, the sugar mills and distilleries have achieved a document allocation of 310 crore litres of ethanol to be equipped to OMCs for the 2020-21 ESY, which runs from November to October, as towards the earlier document of 190 crore litres in 2018-19.

However, owing to slip-ups in creating satisfactory tankage, the OMCs have began reallocating contracted portions from a number of depots, which the distilleries had competed to acquire, to faraway depots in different states, which take a number of days to attain, leading to enormous monetary losses to the distilleries.

In a flurry of letters exchanged between ISMA, the division of meals and public distribution and ministry of petroleum, concern has been raised about distilleries not having the ability to provide a big amount of ethanol as per the contracts that have been signed with the OMCs for ethanol provide yr (ESY) 2020-21.

In his letter to secretary Food and Public distribution, director-general of ISMA, Abinash Verma has red-flagged the difficulty and stated that the OMCs have began directing the ethanol suppliers from Uttar Pradesh to relocate their provides to different depots, which in some instances are in faraway states like Tamil Nadu and Orissa, as an alternative of the contracted depots inside the state, which not solely take a number of days to attain but additionally entails an additional value on the distilleries.

“What is not clear is how such mistakes in estimating the ethanol requirement for so many depots have been made and that too right at the beginning of the season,” he says, including that not solely is there an issue of reallocation of depots, the distilleries are additionally not receiving buy orders from OMCs for the proportionate amount as per contracts. “In several cases, distilleries are facing tremendous problem in the utilisation of their distillery capacities and facing problems of storage of the ethanol,” he stated.

For instance, BPCL’s Kanpur and Mathura depots haven’t issued indents as per the contracts and have requested the suppliers to shift the portions to distant places like Paradeep, whereas HPCL’s Meerut and Bahadurgarh depots, after taking 40% and 44% of the provides respectively, have requested suppliers to shift the remaining amount to Rajasthan, Chhattisgarh, Jharkhand, West Bengal and Orissa. IOCL’s Miraj depot, too, had positioned its necessities on the upper aspect and is subsequently not issuing buy orders, asking suppliers to shift the amount from Kolhapur to Rajasthan. “Due to this, several ethanol suppliers are now reluctant to relocate their supplies to such far-flung states”, Verma states.

Responding to the ISMA letter, meals secretary Sudhanshu Pandey has written to the secretary, petroleum and pure gasoline, stating that given the stiff blending goal, removing of those bottlenecks by the OMCs is important and requested for needed directions to the involved OMCs to deal with the issues being confronted by ethanol suppliers.

“To achieve 10% blending target at pan India level, there is a need to ensure that enough tankage capacity is available with the OMCs,” he says and provides that precedence of allocation of inter-state provides must also be rationalized by OMCs.

Fearing {that a} vital amount of contracted ethanol is not going to get equipped, Verma says that “we have invested heavily in augmenting ethanol production capacities and would soon be even crossing 10% blending on an average across the country. There is urgent need to augment tankage capacities in all the depots which they have shown interest in their EOIs so that they can lift the entire quantity that has been contracted for,” he writes.

Talking to FE on situation of anonymity, a distiller stated that the current state of affairs is a fallout of the excessive amount of contracts for ethanol provides for which the oil companies have been most likely not equipped. “But that should not be an excuse. Because on the one hand, suppliers are legally bound to supply the quantities. If we don’t, we get penalized for the same, but on the other hand, there is no such legal compulsion on the OMCs of any penalty if they do not take supply as per the contracts, which is unfair,” he says, including that now that the ethanol manufacturing capability is getting developed in a short time, provides are additionally growing. “The OMCs need to gear up the supply side by augmenting their tankage capacity, otherwise the whole programme will fall off,” he stated.

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