Indian cabinet approves mechanism for procurement of ethanol by public sector oil marketing companies at higher prices

The prime minister has given approval for the Ethanol Blended Petrol (EBP) programme to set a higher ethanol price derived from various sugarcane-based raw materials for the upcoming sugar season 2021-22, which runs from December 1, 2021 to November 30, 2022. The approval was given that the price of ethanol produced using the C heavy molasses route will be raised from Rs 45.69 to Rs 46.66 per litre. The price of ethanol produced using the B heavy molasses route will be raised from Rs 57.61 to Rs 59.08 per litre. The price of ethanol produced from sugarcane juice via the sugar/sugar syrup pathway will be raised from Rs 62.65 to Rs 63.45 per litre. In addition, GST and transportation costs will have to be paid too. The government has agreed that oil PSEs should be allowed to establish their own prices for 2G ethanol, as this will aid the country’s development of advanced biofuel refineries. Now, the price of grain-based ethanol is set by oil marketing companies.

The approval will not only help the government maintain its policy of providing price stability and remunerative prices for ethanol suppliers, but it will also aid in the reduction of cane farmers’ outstanding arrears, dependency on crude oil imports, and foreign exchange savings, as well as environmental benefits. Allowing oil PSEs to set the price of 2G ethanol will make it easier to build sophisticated biofuel refineries in the country. The plan will be accessible to all distilleries, and a considerable number of them are expected to supply ethanol for the EBP Program. The government has been implementing the EBP programme, which allows oil marketing companies to sell gasoline containing up to 10 per cent ethanol. With effect from April 1, 2019, this initiative has been extended throughout the entire country of India, except the Union Territories of Andaman and Nicobar Islands and the Lakshadweep Islands, in order to promote the use of alternative and environmentally friendly fuels.

Furthermore, few projects are being set up by oil PSEs taking financial assistance from the government’s “Pradhan Mantri JI-VAN Yojana” approved by the CCEA in the past to kick-start the 2G ethanol programme (which can be produced from agricultural and forestry residues including rice, wheat straw, corn cobs, Stover/bagasse and woody biomass.

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