CHENNAI: The Centre’s decision to bring forward the target dates for implementing higher ethanol blending in petrol has sent sugar mill stocks zooming and several companies, including KM Sugar Mills, Riga Sugar, and Dharani Sugars, hit their upper circuits during the trading session on Monday.
Upper and lower circuits are used by stock exchanges to control volatility in stock prices. The upper circuit is the maximum percentage by which a stock can increase during a single session, after which trading in the stock is suspended for a certain period.
While an official notification from the government to oil marketing companies (OMC) had brought forward put the date of implementation for 20 per cent ethanol-blended (E20) petrol to April 1, 2023, a Niti Aayog report released by Prime Minister Narendra Modi over the weekend recommends that E20 petrol should be implemented in phases from April 2023, with complete implementation well within reach by 2025. The earlier targeted date for full E20 rollout had been 2030.
Much is to be gained by this renewed push for ethanol-blended fuels, not least of which is a more eco-friendly fuel and, according to the government’s estimates, around Rs 30,000 crore in import costs.
India currently imports around four-fifths of its petroleum requirements.
But sugar companies struggling with a global sugar surplus for years now stand to gain significantly too.
According to both government and industry estimates, achieving full E20 rollout by 2025 would require oil companies to procure 10 billion litres of ethanol from the market.
According to a Motilal Oswal estimate in May 2021, sugar companies have committed to providing around 3.5 billion litres during October 2020-September 2021.