Government Hikes Ethanol Prices To Help Mills Pay Sugarcane Farmers

The government raised prices of sugarcane-based ethanol supplied for blending with petrol to help early payment to farmers.

The Cabinet Committee on Economic Affairs on Wednesday approved that the price of ethanol from:

• C heavy molasses will be hiked 5.89% to Rs 49.4 per litre.

• B heavy molasses will be increased by 2.8% to Rs 60.7 per litre.

• Sugarcane juice and syrup will be raised by 3.40% to Rs 65.6 per litre.

Additional GST and transportation charges will also be payable, according to a statement released after the cabinet meeting. The hikes are effect from the upcoming cane season.

“All distilleries will be able to take benefit of the scheme and large number of them are expected to supply ethanol for the EBP (Ethanol Blended Petrol) program,” the release said. “Remunerative price to ethanol suppliers will help in early payment to cane farmers, in the process contributing to minimize difficulty of sugarcane farmers,” it said.

Plan To Raise Ethanol Blending To 20% By 2025

Oil retailers sell petrol blended with ethanol up to 10% since 2014 under the EBP programme.

“The current blending of 10% of ethanol helps India save in Rs 40,000 crore of fuel imports," Hardeep Singh Puri, minister of petroleum and natural gas, told reporters after the cabinet decision. "The plan is to increase the blending to 20% by 2025 under the EBP programme."

“We can achieve the 20% ethanol blending target even before the targeted date, provided the volatility in crude price due to Ukraine war normalises in the due course,” Puri said.

The blending programme has been extended to whole of India, the Andaman Nicobar and Lakshadweep islands, with effect from April 1, 2019. And the government has widened the scope to include other agricultural items such as rice husk, maize, broken rice and wheat to increase ethanol production, said Puri.

The country will need to increase its ethanol output to 1,000 crore litres a year from the current 450 crore litre to meet the 20% blending target.

“For the current ethanol supply year--Dec. 1, 2022 through Nov. 30, 2023-- we have tendered for 540 crore litre of ethanol,” Puri said.

Ethanol procurement by state-run oil marketing companies has increased from 38 crore litres in 2013-14 to over 452 crore litre in the ongoing supply year 2021-22. 

The 10% blending target was achieved by June 2022, ahead of the November 2022 deadline.

The government has also provided for long term off-take agreements to encourage setting up of 431 crore litres per annum capacity of dedicated plants in ethanol-deficit states by private players, which is expected to bring investments of Rs 25,000-30,000 crore in the coming years, the statement said.

The government is also working on increasing multimodal transportation of ethanol and ethanol-blended petrol by railways and pipelines, the release said.

Need To Redefine Prices

The government has taken many decisions to lower cane farmer's dues, including diversion of sugar and sugar-based feedstock for production of ethanol, according to the statement.

“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 Nov 1 of a year to Oct. 31 of the following year from Nov. 1, 2023 onwards,” the release said.

As the fair and remunerative price of sugarcane and 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 feedstocks, it said.