Cabinet okays mechanism for ethanol procurement by public oil companies

The Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi on Wednesday approved a mechanism for procurement of ethanol by public sector Oil Marketing Companies (OMCs) under Ethanol Blended Petrol (EBP) programme.

The CCEA has approved higher ethanol price derived from different sugarcane-based raw materials under the EBP programme for the forthcoming sugar season 2022-23 during ESY 2022-23 from December 1, 2022, to October 31, 2023.

"The price of ethanol from C heavy molasses route be increased from Rs.46.66 per litre to Rs 49.41 per litre, the price of ethanol from B heavy molasses route be increased from Rs.59.08 per litre to Rs.60.73 per litre, the price of ethanol from sugarcane juice/sugar/sugar syrup route be increased from Rs.63.45 per litre to Rs.65.61 per litre, additionally, GST and transportation charges will also be payable," the Cabinet Committee on Economic Affairs (CCEA) statement reads.

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

The government has been implementing Ethanol Blended Petrol (EBP) Programme wherein OMCs sell petrol blended with ethanol up to 10 per cent. This programme has been extended to the whole of India except the Union Territories of Andaman Nicobar and Lakshadweep islands with effect from April 1, 2019, to promote the use of alternative and environment-friendly fuels. This intervention also seeks to reduce import dependence for energy requirements and give a boost to the agriculture sector.

The government has notified and administered the price of ethanol since 2014. For the first time in 2018, the differential price of ethanol based on feedstock 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 an average of 10 per cent blending has been achieved in June 2022, much ahead of the target date of November 2022," the statement reads.

The government has advanced the target of 20 per cent 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 the public domain. Other recent enablers include: the 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.

The government has taken many decisions for the reduction of cane farmers' dues including the diversion of sugar and sugar-based feedstock for the production of ethanol. Now, as, a large quantity of ethanol is available right from the beginning of sugar season due to the 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 November 1 of a year to October 31 of the following year from November 1, 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.