Cabinet approves mechanism for procurement of ethanol by public sector OMCs

New Delhi, Nov 02: The government on Wednesday hiked the price of ethanol used for blending in petrol, as it looks to double the blending to 20 per cent. The Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi has approved higher ethanol price etracted from sugarcane juice to Rs 65.60 per litre from the current Rs 63.45 per litre for the supply year beginning December 2022.

The rate for ethanol from C-heavy molasses has been increased to Rs 49.40 per litre from Rs 46.66 per litre currently, and that of ethanol from B-heavy to Rs 60.73 per litre from Rs 59.08 per litre.

All distilleries will be able to take benefit of the scheme and large number of them are expected to supply ethanol for the EBP programme. Remunerative price to ethanol suppliers will help in early payment to cane farmers, in the process contributing to minimize difficulty of sugarcane farmers.

Government has been implementing Ethanol Blended Petrol (EBP) Programme wherein OMCs sell petrol blended with ethanol up to 10%. This programme has been extended to whole of India except Union Territories of Andaman Nicobar and Lakshadweep islands with effect from 01st April, 2019 to promote the use of alternative and environment friendly fuels. This intervention also seeks to reduce import dependence for energy requirements and give boost to agriculture sector.

Government has notified administered price of ethanol since 2014. For the first time during 2018, differential price of ethanol based on feed stock utilized for ethanol production was announced by the Government. These decisions have significantly improved the supply of ethanol, consequently ethanol procurement by Public Sector OMCs has increased from 38 crore litre in Ethanol Supply Year 2013-14 (ESY - currently defined as ethanol supply period from 1st December of a year to 30th November of the following year) to contracts of over 452 crore litre in ongoing ESY 2021-22. The target of achieving average 10% blending has been achieved in June, 2022, much ahead of the target date of November, 2022.

Government has advanced the target of 20% ethanol blending in petrol from earlier 2030 to ESY 2025-26 and a "Roadmap for ethanol blending in India 2020-25" has been put in public domain. Other recent enablers include: enhancement of ethanol distillation capacity to 923 crore litre per annum; Long Term Off-take Agreements (LTOAs) to encourage setting up of 431 crore litre per annum capacity of Dedicated Ethanol Plants (DEPs) in ethanol deficit States by private players which is expected to bring in investments of Rs.25,000-Rs.30,000 crores in coming years; multimodal transportation of ethanol and ethanol blended petrol by railways and pipelines. All these steps add in facilitating ease of doing business and achieving the objectives of Atmanirbhar Bharat.

Government has taken many decisions for reduction of cane farmer's dues including diversion of sugar and sugar-based feedstock for production of ethanol. Now, as, large quantity of ethanol is available right from the beginning of sugar season due to conversion of sugarcane juice and B heavy molasses to ethanol, it has been decided to redefine Ethanol Supply Year as a period of ethanol supply from 1st November of a year to 31st October of the following year from 1st November, 2023 onwards. Moreover, as the Fair and Remunerative Price (FRP) of sugarcane & ex-mill price of sugar have undergone changes, there is a need to revise the ex-mill price of ethanol derived from different sugarcane based feed stocks.