Boost to Ethanol: Government approves higher prices for one-year supply period

Government approves higher prices for one-year supply period

The government is implementing the Ethanol Blending Petrol (EBP) programme, wherein public sector oil marketing companies (OMCs) sell petrol blended with ethanol up to 10 per cent. It is being executed across the country, except in the union territories of the Andaman, Nicobar and Lakshadweep Islands, since April 1, 2019. The aim is to promote the use of alternative and environment-friendly transport fuels. Increased ethanol blending in petrol has many benefits such as reduction in import dependency, support to the agricultural sector, use of a more environment-friendly fuel, less pollution and additional income to farmers. To further promote this sector, the Cabinet Committee on Economic Affairs (CCEA), in September 2019, approved a mechanism for revision of ethanol prices for supply to OMCs. This is effective for a one-year period, from December 1, 2019 to November 30, 2020 (also called the ethanol supply year).The CCEA, which is chaired by the prime minister, has approved this higher price for ethanol derived from different raw materials under the EBP programme, beginning from the 2019-20 sugar season. The prices approved are as follows:

  • The price of ethanol from the C-heavy molasses route is to be increased from Rs 43.46 per litre to Rs 43.75 per litre;
  • The ethanol price from the B-heavy molasses route is to be increased from Rs 52.43 per litre to Rs 54.27 per litre; and
  • The price of ethanol from the sugarcane juice/sugar/sugar syrup route is to be fixed at Rs 59.48 per litre.

Additionally, the goods and services tax (GST) and transportation charges will be borne by the OMCs, which have been advised to fix realistic transportation charges so that long distance transportation of ethanol is not dis-incentivised. The OMCs have been directed to continue according priority to ethanol from sugarcane juice/ sugar/ sugar syrup; B-heavy molasses; C-heavy molasses; and damaged food grains/other sources, in that order. Ethanol availability for the EBP programme is expected to increase significantly due to the higher price being offered for its procurement from sugarcane juice, which includes the “partial sugarcane juice route” and the “100 per cent sugarcane juice route”. Also, for the first time, the direct use of sugar and sugar syrup is being allowed for ethanol production.

Other initiatives

The government has been notifying the administered price of ethanol since 2014. For the first time in 2018, it announced the differential price of ethanol based on the raw material used during its production. This and other decisions have significantly improved the supply of ethanol. Hence ethanol procurement by public sector, OMCs increased from 380 million litres during 2013-14 to over 2,000 million litres during 2018-19. With a view to limit sugar production in India and increase domestic production of ethanol, the government has taken multiple steps such as allowing diversion of B-heavy molasses and sugarcane juice for ethanol production. Given that the ex-mill price of sugar and its conversion cost have undergone changes, there was a need to revise the ex-mill price of ethanol derived from different sugarcane-based raw materials. There was also a demand from the industry to include sugar and sugar syrup for ethanol production to solve the problem of excess inventory and financial liquidity of sugar mills. Besides, over production of sugar has resulted in reduced prices. Due to this, the sugar industry is increasingly not able to pay sugarcane farmers. To resolve this crisis, the government announced a Rs 62,680 million subsidy for the export of 6 million tonnes of sugar for the 2019-20 marketing year, starting October 2019.


As per Excel Engineers, a Pune-based company working with distilleries, sugar mills, cogeneration plants, biofuels, etc., distilleries can maximise profits for the coming year by avoiding the use of coal-based, slop-fired boilers, and adopting fed-batch fermentation, which allows the operator to add nutrients to the reaction, as it gives higher efficiency and alcohol percentage, and is also least affected by bacterial infection. In addition, the sugarcane juice syrup should be taken out at 65 brix and sent to the distillery in a heated condition with minimum storage time to avoid bacterial infection. Finally, distilleries should be equipped with juice sterilisers, heat exchangers and coolers with proper standby systems and automation. In sum, the government scheme will help OMCs to procure 2.6 billion litres of ethanol during 2019-20 and, in the process, reduce the country’s energy import dependency. The move is also expected to help the sugar industry clear the farmers’ dues. According to industry estimates, next year, India would save $1 billion in crude oil imports on account of ethanol blending.

(With inputs from

By Anita Khuller