Sale of ethanol-blended petrol has turned more profitable for the oil marketing companies with the recent increase in petrol prices. Their margin on a litre of ethanol has moved up from INR 7.90 per litre to INR 12.43 since November when blending was reintroduced.

This also helps the OMCs Indian Oil, Bharat Petroleum and Hindustan Petroleum to partly reduce the current loss on petrol. The OMCs are currently incurring a loss of INR 1.22 per litre of petrol. Take an OMC depot that sells 1,000 litre of petrol every day but also blends ethanol at the approved rate for 5%. If we account the 5% ethanol in 1,000 litres, their loss declines from INR 1,220 to INR 1,159.

They further reduce their loss by INR 621.50 from the gains made on the 50 litres of ethanol that will be blended to 950 litres of petrol. Ultimately, this leaves the OMCs with a much lower loss of INR 537.50 on sale of 1,000 litres ethanol-blended petrol. The loss at a depot that blends ethanol is less than half compared to one that does not blend ethanol.

Mr Abinash Verma director general of the Indian Sugar Mills Association said that “In November, the depot price of petrol excluding dealer commission and state tax was INR 40.08 per litre and the landed cost of ethanol was INR 32.18 per litre. While the depot price of petrol has now increased to INR 44.6 per litre, the landed ethanol price has remained same, thereby leaving the OMCs with better margins compared to November.”

Currently, ethanol blending is operational in Delhi, Uttar Pradesh, Punjab, Haryana, Maharashtra, Andhra Pradesh and Karnataka.

(Sourced from BS)