Indian ethanol tender seeks 16% more ethanol than industry can produce

In India, the tender launched last week to secure enough ethanol supplies to fulfill a 10% ethanol blend only from indigenous sources is yet again set to fail even before it begins due to the fact that the 2.6 billion liters sought is about 16% higher than the entire production capacity from the country’s sugarcane mills at just 2.24 million tons. In last year’s tender for 1.56 billion liters over an 18 month period, mills were only able to supply 1.23 billion liters, but then there was criticism for the poor timing of the tender as well as setting the fixed price in relation to the start of the sugarcane crush and therefore the mills’ capacity to plan production levels. From what was offered, however, only a total of about 600 million liters will likely be supplied during that period, meaning just a 3.5% blend. In order to reach the demand set by the new tender, a minimum of $150 million in fresh investment will be required, which industry is not likely to be able to handle.