Having incurred savings of Rs. 154 crore (Rs. 1.54 billion) from ethanol-blended petrol last year, the oil marketing companies have floated tenders to purchase 1.01 billion litres of ethanol for blending.
The sugar industry is gearing up to offer the entire quantity for the tenders, which will close on September 2.
Supplies will be made during the new sugar year beginning October.
Indian Oil Corporation, the biggest OMC, has floated a tender to buy 455 million litres, while Bharat Petroleum and Hindustan Petroleum intend to purchase 283 and 277 million litres, respectively, said sugar industry officials.
OMCs currently buy ethanol at Rs. 27 per litre. This price is adhoc and is expected to go up if the government accepts recommendations of the Saumitra Chaudhuri committee that has suggested linking ethanol to petrol prices of the previous quarter after making adjustments for ethanol's calorific value, mileage and tax incentives.
Last year, OMCs had planned to purchase 1.04 billion litres. The sugar industry, led by companies like Renuka Sugars, Bajaj Hindusthan and Balrampur Chini,
offered around one billion litres.