Logistics nightmare scuttles ethanol blending programme; targets likely to fall short

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Failing to create adequate tankage for ethanol supplied by sugar producing distilleries, oil marketing companies (OMCs) have started reallocating contracted quantities from several depots, which the distilleries had competed to obtain, to faraway depots in other states. This takes several days, resulting in huge financial losses to the distilleries.

In a series of letters exchanged among the Indian Sugar Mills Associations (ISMA), the department of food and public distribution and ministry of petroleum, concern has been raised about distilleries not being able to supply a significant quantity of ethanol as per the contracts that were signed with the OMCs for ethanol supply year (ESY) 2020-21.

ISMA, however, has put the onus back on OMCs. In his letter to secretary Food and Public distribution, director-general of ISMA, Abinash Verma has red-flagged the issue and said that the OMCs have started directing the ethanol suppliers from Uttar Pradesh to relocate their supplies to other depots. Some of these depots are in faraway states like Tamil Nadu and Orissa, instead of the contracted depots within the state, which not only takes several days to reach but also entails an extra cost on the distilleries.

For instance, BPCL’s Kanpur and Mathura depots have not issued indents as per the contracts and have asked the suppliers to shift the quantities to distant locations like Paradeep, while HPCL’s Meerut and Bahadurgarh depots, after taking 40% and 44% of the supplies respectively, have asked suppliers to shift the remaining quantity to Rajasthan, Chhattisgarh, Jharkhand, West Bengal and Orissa.

IOCL’s Miraj depot, too, had placed its requirements on the higher side and is therefore not issuing purchase orders, asking suppliers to shift the quantity 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, food secretary Sudhanshu Pandey has written to the secretary, petroleum and natural gas, stating that given the stiff blending target, removal of these bottlenecks by the OMCs is essential and asked for necessary instructions to the concerned OMCs to address the problems being faced by ethanol suppliers.

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