Cabinet Hikes Ethanol-Procurement Price For Public Sector OMCs

The Union Cabinet approved on Wednesday a revision of ethanol procurement price for public sector oil marketing companies under the Ethanol Blended Petrol Programme for the 2024–25 supply year from Nov. 1, 2024, to Oct. 31, 2025.

During a press briefing, Union minister Ashwini Vaishnaw announced that the administered ex-mill price of ethanol derived from C-heavy molasses had been raised to Rs 57.97 per litre from Rs 56.58 per litre.

The approval will not only facilitate the continued policy for the government in providing price stability and remunerative prices for ethanol suppliers, but will also help in reducing dependency on crude oil imports, savings in foreign exchange and bring benefits to the environment, the minister said.

In the interest of sugarcane farmers, as in the past, goods and services tax, and transportation charges will be separately payable. "Increase in prices of CHM Ethanol by 3% will assure sufficient availability of ethanol to meet the increased blending target," he said.

The government has been implementing an ethanol blended petrol programme, wherein the OMCs sell petrol blended with ethanol up to 20%. This programme is being implemented across the country 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. 

During the last 10 years, as on Dec. 31, 2024, ethanol blending in petrol by public-sector OMCs has resulted in approximate savings of more than Rs 1.13 lakh crore of foreign exchange and crude oil substitution of about 193 lakh tonnes, according to an official release.

Ethanol blending by public sector OMCs has increased from 38 crore litres in ethanol supply year 2013-14 to 707 crore litre achieving average blending of 14.60% in ethanol supply year 2023-24.

Government has advanced the target of 20% ethanol blending in petrol from earlier 2030 to ethanol supply year 2025-26 and a roadmap for ethanol blending in India 2020-25 has been put in public domain.

As a step in this direction, the OMCs plan to achieve 18% blending during the ongoing ESY 2024-25. Other recent enablers include enhancement of ethanol distillation capacity to 1,713 crore litres per annum; long-term offtake agreements to set up dedicated ethanol plants in ethanol deficit states; encourage conversion of single-feed distilleries to multi feed; availability of E-100 and E-20 fuel; launch of flexible-fuel vehicles.