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Cabinet approves hike in ethanol procurement prices for state-run OMCs

The Cabinet Committee on Economic Affairs has approved a rise in ethanol procurement price for Public Sector OMCs, setting it at Rs. 57.97 per liter for the 2024-25 EBP Program

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Rimjhim Singh New Delhi

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The Cabinet Committee on Economic Affairs (CCEA), led by Prime Minister Narendra Modi, has sanctioned an increase in the ethanol procurement price for Public Sector Oil Marketing Companies (OMCs) for the Ethanol Supply Year (ESY) 2024-25, which runs from November 1, 2024, to October 31, 2025, under the government’s Ethanol Blended Petrol (EBP) programme
 
As a result, the ex-mill price of ethanol derived from C Heavy Molasses (CHM) for the 2024-25 EBP programme has been set at Rs 57.97 per litre, up from Rs 56.58 per litre. 
The approval will not only support the government's ongoing policy to ensure price stability and fair compensation for ethanol suppliers but also reduce reliance on crude oil imports, save foreign exchange, and offer environmental benefits, the Cabinet Committee on Economic Affairs said in a press release.
 
 
In line with previous practices, GST and transportation charges will remain payable separately to benefit sugarcane farmers. A 3 per cent price increase for CHM Ethanol will help guarantee sufficient ethanol availability to meet the higher blending target.
 
The government is actively advancing the Ethanol Blended Petrol (EBP) programme, which involves the blending of up to 20 per cent ethanol with petrol by oil marketing companies (OMCs) across the country. This initiative promotes the use of alternative and eco-friendly fuels, reduces energy import dependency, and supports the agriculture sector. 
 
Over the past decade (up to December 31, 2024), ethanol blending by Public Sector OMCs has led to foreign exchange savings exceeding Rs 1.13 trillion and the substitution of around 19.3 million metric tonnes of crude oil.
 
Ethanol blending by OMCs has increased significantly, from 380 million litres in the 2013-14 Ethanol Supply Year (ESY) to 7.07 billion litres in the 2023-24 ESY, achieving an average blending rate of 14.60 per cent.
 
"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 public domain. As a step in this direction, OMCs plan to achieve 18% blending during the ongoing ESY 2024-25," the press release stated.
 
As part of this push, OMCs aim for an 18 per cent blending rate during the ongoing ESY 2024-25. Key developments include an increase in ethanol distillation capacity to 17.13 billion litres annually, the establishment of Long Term Off-take Agreements (LTOAs) for Dedicated Ethanol Plants (DEPs) in ethanol-deficit states, the promotion of multi-feed distilleries, the availability of E-100 and E-20 fuels, and the introduction of flexi-fuel vehicles. These measures also contribute to a more business-friendly environment and support the goals of Atmanirbhar Bharat.
 

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First Published: Jan 29 2025 | 3:40 PM IST

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