Govt approves mechanism for procurement of ethanol by Oil PSUs

New Delhi: The Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi has given approval for fixing higher ethanol prices derived from different sugarcane-based raw materials under the Ethanol Blended Petrol (EBP) Programme. The step will benefit sugarcane farmers and can also lead to a higher blending of ethanol with conventional petroleum products. The new price will be applicable for the forthcoming sugar season 2021-22 during ESY 2021-22 from December 01, 2021, to November 30, 2022.

The hike pushes up the price of sugarcane-based ethanol to Rs 63.45 a litre from Rs 62.65, Minister of Information and Broadcasting Anurag Singh Thakur said. The new prices of ethanol will come into effect from December 1, the minister said. The rate for ethanol from B-heavy molasses and C-heavy molasses has also been hiked by Rs 2.55 per litre and Rs 2.12 per litre, respectively. The Price of ethanol from C heavy molasses route be increased from Rs 45.69 per litre to Rs 46.66 per litre, the rate of ethanol from B heavy molasses route be increased from Rs 57.61 per litre to Rs 59.08 per litre, and the rate of ethanol from sugarcane juice, sugar/sugar syrup route be increased from Rs 62.65 per litre to Rs 63.45 per litre.

"Government has decided that Oil PSEs should be given the freedom to decide the pricing for 2G ethanol as this would help in setting up advanced biofuel refineries in the country. It is important to note that grain-based ethanol prices are currently being decided by Oil Marketing Companies (OMCs) only", Thakur said.

The decision to allow Oil PSUs to decide the price of 2G ethanol would facilitate setting up advanced biofuel refineries in the country. The government has notified administered price of ethanol since 2014. For the first time during 2018, the differential price of ethanol based on raw material utilized for ethanol production was announced by the Government. These decisions have significantly improved the supply of ethanol thereby ethanol procurement by Public Sector OMCs has increased from 38 crore litre in Ethanol Supply Year (ESY) 2013-14 to contracted over 350 crore litre in ongoing ESY 2020-21.

Thakur said the ethanol blending with petrol has touched 8% in the 2020-21 marketing year (December-November) and is expected to reach 10% in the next year, and 20% by ESY 2025-26.

Consistent surplus of sugar production is depressing sugar price. Consequently, sugarcane farmers’ dues have increased due to the lower capability of the sugar industry to pay the farmers. The government has taken many decisions for the reduction of cane farmers’ dues. With a view to limit sugar production in the Country and to increase domestic production of ethanol, the Government has taken multiple steps including, allowing diversion of B heavy molasses, sugarcane juice, sugar and sugar syrup for ethanol production. Now, as the Fair and Remunerative Price (FRP) 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 raw materials.

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