Govt hikes ethanol price, targets 12% blending in petrol next year

The government on Wednesday hiked the price of ethanol used for blending in petrol as it looked to raise the doping quantity to cut India's reliance on imported oil.

The Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Narendra Modi, raised the price of ethanol from all three varieties, Oil Minister Hardeep Singh Puri told reporters here.

The price of ethanol extracted from sugarcane juice was increased to Rs 65.61 per litre, from the current Rs 63.45 per litre for the supply year beginning December 2022.

The rate for ethanol from the C-heavy molasses route has been increased to Rs 49.41 per litre, from Rs 46.66 per litre currently, and that of ethanol from the B-heavy route to Rs 60.73 per litre, from Rs 59.08 per litre, he said.

At present, 10 per cent ethanol is blended in petrol (10 per cent ethanol, 90 per cent petrol) and the government is looking to double this quantity by 2024-25.

"We have saved about Rs 40,000 crore in forex outgo from 10 per cent blending besides benefiting the farmers," he said, adding a pilot to start E-20 (petrol with 20 per cent ethanol) will start from April 2023 at select petrol pumps.

The use of ethanol, extracted from sugarcane as well as broken rice and other agri produce, will help the world's third-largest oil consumer and importing country cut its reliance on overseas shipments. India currently is 85 per cent dependent on imports for meeting its oil needs.

As much as 452 crore litre of ethanol was blended in petrol during the supply year ending November 30, 2022. For the next year, 540 crore litres procurement is being targeted with an eye to start larger volumes of blending.

The government expects 12 per cent ethanol blending in petrol in 2023 at most places.

Puri said from 2023, the supply year will change from November to October instead of the present practice of considering the ethanol supply year from December to November.

This is to avoid sugar mills from holding ethanol stocks in anticipation of price revision.

So, the 540 crore litres of ethanol procurement is the target for 11 months (December 2022 to October 2023), he said.

"As we reach the 20 per cent target, we can look at raising the percentage of the blend," he said.

Automobile engines can run on E-20 (petrol doped with 20 per cent ethanol) with minor modifications in the engine for corrosion etc.

The government has notified the administered price of ethanol since 2014. For the first time in 2018, the differential price of ethanol based on feedstock utilized for ethanol production was announced by the Government.

These decisions have significantly improved the supply of ethanol, consequently, ethanol procurement by public sector oil marketing companies (OMCs) has increased from 38 crore litre in Ethanol Supply Year 2013-14 (ESY defined as ethanol supply period from December 1 of a year to November 30 of the following year) to contracts of over 452 crore litre in ongoing ESY 2021-22.

The target of achieving an average of 10 per cent blending has been achieved in June 2022, much ahead of the target date of November 2022, he said.

"Government has advanced the target of 20 per cent ethanol blending in petrol from earlier 2030 to ESY 2025-26," he said adding this programme gives sugarcane farmers an additional source of income.