Govt hikes ethanol price by up to Rs 3.34/ltr



The government on Thursday hiked the price of ethanol extracted from sugarcane for doping in petrol by up to Rs 3.34 per litre.

The Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister Narendra Modi raised the price of ethanol extracted from sugarcane juice to Rs 62.65 per litre from current Rs 59.48 per litre for the supply year beginning December 2020.

The rate for ethanol from C-heavy molasses has increased from Rs 43.75 per litre to Rs 45.69 per litre, and that of ethanol from B-heavy to Rs 57.61 per litre from Rs 54.27 per litre, I&B Minister Prakash Javadekar said.

The steady rise in the price of ethanol paid by oil marketing companies has led to ethanol procurement jump to 195 crore litre in 2019-20 (December 2019 to November 2020) from 38 crore litre in 2013-14.

Oil marketing companies Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) will bear GST and transportation cost on the ethanol procured for doping in petrol, he said.

"Ethanol is very environment-friendly fuel with zero-emission," he said.

The ethanol procurement season by oil marketing companies (OMCs) will run from December 1, 2020, to November 30, 2021, projecting a requirement of 465 crore litres of ethanol for meeting the 10 per cent blending target.

"All distilleries will be able to take benefit of the scheme and a large number of them are expected to supply ethanol for the programme. Remunerative price to ethanol suppliers will help in the reduction of cane farmer's arrears, in the process contributing to minimizing the difficulty of sugarcane farmers," an official statement issued on the CCEA decision said.

The government has been implementing Ethanol Blended Petrol (EBP) Programme wherein OMCs sell petrol blended with ethanol up to 10 per cent and has extended to the whole of India except Union Territories of Andaman Nicobar and Lakshadweep islands with effect from April 1, 2019.

"With a view to providing long term perspective to the stakeholders, the Petroleum Ministry has published 'Ethanol Procurement Policy on a long-term basis under EBP Programme'. In line with this, OMCs have already completed the one-time registration of ethanol suppliers."

"OMCs have further reduced the security deposit amount from 5 per cent to 1 per cent extending a benefit of around Rs 400 crore to ethanol suppliers," the statement said.

They have also reduced the applicable penalty on non-supplied quantity from earlier 5 per cent to 1 per cent extending a benefit of around Rs 35 crore to suppliers.

"Consistent surplus of sugar production is depressing sugar price. Consequently, sugarcane farmer's dues have increased due to the lower capability of the sugar industry to pay the farmers. Government has taken many decisions for reduction of cane farmer's dues," it said.