Ethanol sourcing from sugar mills to be less this season, Centre also mulls lower-than-expected price hike: CNBC Awaaz

Sugar mills could face disappointment after Centre tweaked a crucial condition in the tender document of oil marketing companies (OMC) to procure ethanol from mills, aside of considering a lower-than-expected hike in the price at which the biofuel would be purchased, CNBC-Awaaz reported on December 18 citing people familiar with the development.

In a major change to the terms of the procurement tender, OMCs have been asked to give priority to cooperative sugar mills when it comes to sourcing ethanol, a decision that may lead to less government offtake of ethanol from the leading mills. This decision will be effective immediately, said the channel.

Shree Renuka Sugars, Bajaj Hindusthan, Balrampur Chini, Dhampur Sugar Mills and Dwarikesh Sugar are some of the leading ethanol producing sugar mills in India. Ethanol is a high-margin produce for sugar mills.

Earlier, the condition was to procure ethanol from sugar mills with whom oil marketing companies had a long-term purchase pact in place. IOC, HPCL, BPCL and MRPL had recently issued a joint tender for 2024-25 sugarcane season to procure 88 crore litre ethanol.