The Centre on Wednesday announced increasing ethanol procurement prices with effect from December 1.

For calculating the increments in price, a fair mechanism has been worked out that will factor in the source from where it originates. As a result, prices have been increased from Rs 49.41 per litre from existing Rs 46.66 per litre for ethanol derived from the C heavy molasses route.

For B heavy molasses, the jump has been to Rs 60.73 per litre from Rs 59.08 per litre. The price of ethanol from sugarcane juice/sugar/sugar syrup route has been increased to Rs 65.61 per litre from Rs 63.45 per litre. In addition, GST and transportation charges will also be payable, the government note said.

The announcement is significant for India as the country has advanced its target of 20 percent ethanol blend in petrol from 2030 to 2025. The current national average of ethanol blended petrol stands at 10 percent and is sold as E10.

According to official estimates, the updated Ethanol Blended Petrol (EBP) programme, which is also referred as E20, has the potential to create additional opportunities to generate over 10 billion litres per annum of ethanol capacity with adoption of a wide range of feedstocks.

Its implementation will help in saving foreign exchange of over Rs 30,000 crore annually. India, which sources over 80 percent of its fuel needs through imports, spends close to $101.4 billion annually on crude oil imports. And with every dollar increase in the crude oil price significantly increases the country's annual import bill to around Rs 10,700 crore.

Among other recent enablers which could help speed up the adoption process includes increasing of ethanol distillation capacity to 923-crore litres per annum; Long Term Off-take Agreements (LTOAs) to encourage private players to set up 431 crore litre per annum capacity of Dedicated Ethanol Plants (DEPs) in ethanol deficit States, and multimodal transportation of ethanol and ethanol blended petrol by railways and pipelines, the statement added.

Meanwhile, many of the OEMs are rolling out flex engines for their production vehicles. Recently, Japanese auto major Toyota showcased a Corolla Altis Hybrid as a pilot project to test flex-fuel-powered cars in India. The car is already on sale in markets like Brazil where the car is tuned to use ethanol-blended fuel (E85).

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