In 2009, the CCEA had decided to mix five per cent ethanol in petrol but it could not be implemented due to opposition by some sections in the chemical and petroleum sectors.
"The five per cent mandatory ethanol blending with petrol should be implemented across the country, for which the Petroleum Ministry will issue a gazette notification in a next few days, for oil companies to implement from 2012-13 sugar season, effective from December 1, 2012," an official release said.
"The CCEA also decided that the price of bio-ethanol, to be mixed with petrol, would be decided by oil-marketing companies and its suppliers," it said.
The ethanol-blending programme is presently being implemented in a total of 13 states with blending level of about two per cent against a mandatory target of 5 per cent.
In the backdrop of reservations against the proposal that domestic suppliers would not be able to meet the supply requirements, the government has also allowed import of ethanol in case of shortfalls.
The proposal moved by the Ministry of New and Renewable Energy is expected to help the country in cutting down the oil bill for 100 crore litres of petrol and also help in reducing carbon dioxide and carbon monoxide emissions by around 15 per cent.
Ethanol is a by-product of sugarcane.
States such as Uttar Pradesh and Maharashtra are the largest producers and can be developed as major suppliers of it, officials said.
