Government approves procurement mechanism for Ethanol Blended Petrol

The Cabinet Committee on Economic Affairs (CCEA) has approved the mechanism for procurement of ethanol by public sector oil marketing companies (OMCs) to carry out the ethanol blended petrol (EBP) Programme. It has also revised the ethanol price for supply to public sector OMCs.

CCEA has approved the following for the forthcoming sugar season of 2018-19 during the ethanol supply period from December 1, 2018, to November 30, 2019:

-To fix the ex-mill price of ethanol derived out of C heavy molasses to Rs.43.70 per litre (from prevailing price of Rs.40.85 per litre). Additionally, GST and transportation charges will also be payable.

-To fix the ex-mill price of ethanol derived from B-heavy molasses and sugarcane juice at Rs.47.49 per litre.  Additionally, GST and transportation charges will also be payable.

-As the price of ethanol is based on estimated FRP for sugar season 2018-19, it will be modified by MoP&NG as per actual Fair & Remunerative Price (FRP) declared by the Government.

-For ethanol supply year 2019-20, ethanol prices will be modified by MoP&NG as per normative cost of molasses and sugar derived from FRP of sugarcane.

The government claims that all distilleries will be able to take benefit of the scheme and a large number of them are expected to supply ethanol for the EBP programme. Remunerative price to ethanol suppliers will help in reduction of cane farmer's arrears, in the process contributing to minimising the difficulty of sugarcane farmers. Ethanol availability for EBP Programme is expected to increase significantly due to a higher price for C heavy molasses-based ethanol and enabling procurement of ethanol from B heavy molasses and sugarcane juice for the first time.

Increased ethanol blending in petrol has many benefits including reduction in import dependency, support to the agricultural sector, more environmentally friendly fuel, lesser pollution and additional income to farmers.

The government has notified administered price of ethanol since 2014. This decision has significantly improved the supply of ethanol during the past four years. The ethanol procured by public sector OMCs has increased from 38 crore litre in ethanol supply year 2013-14 to estimated 140 crore litre in 2017-18.

As realization from ethanol is also one of the components in revenue of sugar mills/distilleries, Government has decided to review the price of ethanol derived out of C heavy molasses.

Government is also deciding the price of B heavy molasses and Sugarcane juice for the first time which is likely to positively impact the capability of the sugar industry to pay farmers dues and increase the availability of ethanol for EBP Programme. This is also in line with the National Policy on Biofuels -- 2018 announced by the Government during May 2018 which has widened the scope of raw material for ethanol production.

Ethanol-blended petrol (EBP) programme, which was launched by the government in 2003, was introduced to promote the use of alternative and environmentally friendly fuels. This intervention also seeks to reduce import dependency for energy requirements and give a boost to the agriculture sector.