Sugar mills again allege OMCs differentiating in ethanol purchase tie-ups

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27 March 2022, New Delhi: The sugar industry has once again alleged that Oil Marketing Companies (OMCs) are hesitating in entering into long-term ethanol purchase contracts with established sugar firms and those who do not become part of the concessional loan scheme of the Central government.

The millers, in a letter written few days back to the Union food and petroleum secretaries said that unless OMCs alter their purchase plans, the significant investments put in by sugar companies in increasing their ethanol manufacturing capacities will come into question which in turn can impact the 20 per cent blending target by 2025.

The OMCs, on their part, according to earlier reports, said that there is no preference in awarding contracts for supply of ethanol. And, as part of their policy there is intention to change the ethanol supply mix from sugarcane to grains to make it more balanced.

The sugar firms in their letter have requested the government to ensure that OMCs enter into a long term ethanol purchase contract of more than 10 years with all plants where banks have sanctioned loans even if they are outside the subsidy scheme.

Secondly, the clause in the procurement tenders that give preference to new ethanol plants which have long term bipartite agreement with oil companies over existing ethanol suppliers, may be deleted with immediate effect.

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