Govt advances ethanol blending target; OMCs to sell 20% blended petrol from April 2023

• The government's optimism in advancing the target stems primarily from the increased availability of ethanol in the country

• This has happened due to the government's decision to allow production of ethanol from surplus rice with Food Corporation of India (FCI) and maize

New Delhi: Advancing the target for achieving 20 percent ethanol blending by two years, the government has said that all oil companies will be required to sell ethanol-blended petrol starting April 1, 2023. The previous target for achieving 20 percent ethanol blending was 2025. In a notification published in the official gazette, the Ministry of Petroleum and Natural Gas said, "… the Central Government hereby directs that the Oil Companies shall sell Ethanol Blended Petrol with percentage of ethanol up to twenty per cent as per the Bureau of Indian Standards specifications, in the whole of the States and union territories."

"This Notification shall come into force with effect from the 1stApril, 2023," said the ministry.

Ethanol blending target advanced

The government's optimism in advancing the target stems primarily from the increased availability of ethanol in the country. This has happened due to the government's decision to allow production of ethanol from surplus rice with Food Corporation of India (FCI) and maize. Earlier, ethanol was being produced only from C-heavy molasses from the sugar industry. 

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A tender floated by the Oil Marketing Companies (OMCs) for 195 crore litres of ethanol in November 2020 received an overwhelming response as bids were received for 320 crore litres of ethanol. This was the first ethanol procurement tender floated by the oil PSUs after the government allowed production of ethanol from maize.

Interest subvention scheme for ethanol distilleries

On December 30, 2020, the Union Cabinet approved the expansion of interest subvention scheme to provide financial assistance for enhancement of ethanol distillation capacity from grain-based distilleries along with molasses-based distilleries. The total outlay under the interest subvention scheme is Rs 8,460 cr. The expanded interest subvention scheme is expected to fuel investment of about Rs 40,120 crore in the ethanol value chain for making ethanol available for blending with petrol.

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