New Delhi: The government on Wednesday raised rates of ethanol purchased by oil marketing companies to blend with petrol and advanced the target for them to sell 20% ethanol blended petrol (EBP) by about five years from the earlier deadline of 2030 after India achieved the 10% blending target in May this year, petroleum minister Hardeep Singh Puri said.
The move will benefit farmers and also help reduce India’s dependence on imported crude, saving foreign exchange, he said while briefing the media about the decision of the Cabinet Committee on Economic Affairs (CCEA). 10% EBP saved about ₹40,000 crore in forex outgo, he added.
India is the third largest crude oil consumer after the US and China. It imports 85% of the crude oil it processes and pays in dollars. It imported 212 million tonnes of crude oil in 2021-22 , spending around $120.4 billion.
CCEA, chaired by Prime Minister Narendra Modi, approved higher ethanol price derived from different sugarcane-based raw materials under the EBP Programme for the forthcoming sugar season 2022-23 and the ethanol supply year (ESY) 2022-23 from December 1, 2022 to October 31, 2023, the petroleum ministry said in a statement.
It added that the price of ethanol derived from C-heavy molasses, the end product of sugar manufacture, would be increased from Rs. 46.66 per litre to Rs.49.41 per litre.
{{/usCountry}}It added that the price of ethanol derived from C-heavy molasses, the end product of sugar manufacture, would be increased from Rs. 46.66 per litre to Rs.49.41 per litre.
{{/usCountry}}The price of ethanol from B-heavy molasses (a richer intermediate in the sugar manufacturing process) route has been increased from ₹59.08 per litre to ₹60.73 per litre, while the price of ethanol from sugarcane juice/sugar/sugar syrup route has been increased from ₹63.45 per litre to ₹65.61 per litre, it added. Prices exclude GST and transportation charges.
The government has also advanced the target of 20% ethanol blending in petrol from 2030 to ESY 2025-26 and a “roadmap for ethanol blending in India 2020-25” has been put in public domain, Puri said.
The government is considering launching a pilot project to start E-20 (petrol doped with 20% ethanol) from April 2023 at certain petrol pumps, he added. Besides sugarcane, ethanol can be extracted from broken rice and other agri-produce. India would have used 4.52 billion litres of ethanol to blend in petrol during ESY ending November 30, 2022 and plans to procure 540 crore litres in the next year.
There is a proposal to change the ESY from November to October instead of the present practice of considering the ethanol supply year from December to November to prevent sugar mills from holding ethanol stocks in anticipation of price revision, the minister said.
Government plans to achieve a 12% EBP immediately , said a government official who asked not to be named. Vehicles can run on 20% EBP with minor modifications in the engine to prevent corrosion.
“All petrol run vehicles manufactured from 1st April 2025 will be compliant to 20% ethanol blended petrol,” said Rajesh Menon, Director General, Society of Indian Automobile Manufacturers (SIAM).
Indian Sugar Mills Association (ISMA) said the revised prices for ethanol manufactured from C-Heavy and B-Heavy molasses will encourage mills to divert more sugar towards ethanol production. “However, the revision of price of ethanol manufactured from sugarcane juice/sugar syrup is not enough to drive additional investments in new capacity building. The industry has represented many times to the Government that the price of ethanol produced from sugar juice/syrup should be based on Return on Equity with a payback period of 5 years. The derived price based upon ROE works to ₹69.85/ltr,” Sonjoy Mohanty, DG, ISMA said in a statement.
“2022-23 ESY is a crucial year, as the country is expected to achieve 12% ethanol blending. The total requirement is 6.51 billion ltrsof ethanol. Sugar mills are expected to divert about 45 lakh tons of sugar towards ethanol production. A higher fixed price of ethanol derived from sugarcane juice/sugar syrup would have given the industry much needed push to meet target set by the Hon’ble PM,” he added.