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Govt's ethanol tender this week

The government is likely to float a tender to buy 587 million litres of ethanol from domestic sugar mills this week.

india Updated: Sep 07, 2006 20:34 IST

India is likely to float a tender to buy 587 million litres of ethanol from domestic sugar mills this week, a top sugar industry official said on Wednesday.

India, which imports about 70 per cent of its crude oil, allows oil refiners to blend 5 per cent of ethanol, a byproduct of sugar, in each litre of petrol in some states.

The tender is aimed to tie up ethanol supplies for the year starting in October, C.S. Nopany, president of Indian Sugar Mills Association, said.

The tender is likely to be floated either jointly by state-run oil companies or separately by a single company, another industry official said.

Nopany said domestic sugar mills had adequate capacity to meet India's ethanol needs. Many mills including Balrampur Chini Mills, Bajaj Hindusthan, Simbhaoli Sugar and Riga Sugar are expanding ethanol capacities.

India's sugar output in the new season commencing October is expected to jump to 23 million tonnes from 19 million tonnes in the current season, industry officials estimated.

Last month, representatives of the Indian sugar industry, state-run oil companies and petroleum ministry officials failed to agree on a price for cane-based ethanol.

While sugar mills had demanded Rs 27 per litre of ethanol, oil companies were not willing to pay more than Rs 21, industry officials said.

Oil Minister Murli Deora had then asked state-run oil marketing firms to purchase ethanol through an open tender to resolve the issue of prices.