To encourage vendors to maximise ethanol supplies, state-run oil marketing companies (OMCs) will provide them monetary relief between Rs 1,179 -2,337 per kilolitre (KL) for six months till November.

The move will help OMCs narrow their marketing losses (under-recoveries) due to elevated crude prices, currently pegged between Rs 18-21 per litre for petrol and diesel. It will also expedite the plan to double ethanol blending to 20% from 10% now.

The need for extra ethanol is all the more necessary now as the prices for Indian basket hit a decade’s high of $121.28 per barrel and chances are, it might go up even further. OMCs are, on the other hand, handicapped when it comes to raising prices, in support of the government’s efforts to tame high inflation.

In a missive to sugar mills, OMCs have said the monetary relief scheme would be applicable for all supplies of ethanol invoiced to them between June 1 and November 30.

“The relief amount shall be payable by the respective OMCs after completion of each quarter for the supplies invoiced by the vendor in that quarter. Applicable GST of 5% shall be payable on the relief amount,” they said.

However, they said there would be no change in the basic price of ethanol (set by the government) from different feedstock and the prevailing rates need to be maintained in the invoices.

“For availing the relief amount, vendors shall raise separate invoices for the relief amount after completion of each quarter,” they said.

OMCs will offer Rs 1,604/KL monetary relief for sugarcane juice/ sugar or sugar syrup-based ethanol, Rs 1,493/KL for ethanol based on B-heavy molasses and Rs 1,179/KL for C-heavy molasses.

Ethanol produced from damaged foodgrain will draw Rs 2,337/KL monetary relief. For surplus rice-based ethanol, the amount will be Rs 1,437/KL.