Cabinet Approves New Ethanol Procurement Mechanism for Public Sector OMCs

The Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister Shri Narendra Modi, has approved revision of ethanol procurement price for Public Sector Oil Marketing Companies (OMCs) for the Ethanol Supply Year (ESY) 2024-25 starting from 1^st November, 2024 to 31^st October 2025 under the Ethanol Blended Petrol (EBP) Programme of the Government of India.  Accordingly, the administered ex-mill price of ethanol for the EBP Programme derived from C Heavy Molasses (CHM) for the Ethanol Supply Year 2024-25 (1^st November 2024 to 31^st October 2025) has been fixed at Rs.57.97 per litre from Rs.56.58 per litre.

The approval will not only facilitate the continued policy for the Government in providing price stability and remunerative prices for ethanol suppliers but will also help in reducing dependency on crude oil imports, savings in foreign exchange and bring benefits to the environment.  In the interest of sugarcane farmers, as in the past, GST and transportation charges would be separately payable.  Increase in prices of CHM Ethanol by 3% will assure sufficient availability of ethanol to meet the increased blending target.

Government has been implementing Ethanol Blended Petrol (EBP) Programme wherein OMCs sell petrol blended with ethanol up to 20%. This Programme is being implemented across the country to promote the use of alternative and environment friendly fuels. This intervention also seeks to reduce import dependence for energy requirements and give boost to agriculture sector.  During the last ten years (as on 31.12.2024), ethanol blending in petrol by Public Sector Oil Marketing Companies (OMCs) has resulted in approximate savings of more than Rs.1,13,007crore of foreign exchange and crude oil substitution of about 193 lakh metric tonnes.

Ethanol blending by Public Sector Oil Marketing Companies (OMCs) has increased from 38 crore litre in Ethanol Supply Year 2013-14 (ESY – currently defined as ethanol supply period from 1^stNovember of a year to 31^st October of the following year) to 707crore litre achieving average blending of 14.60%in ESY 2023-24.

Government has advanced the target of 20% ethanol blending in petrol from earlier 2030 to ESY 2025-26 and a “Roadmap for ethanol blending in India 2020-25” has been put in public domain. As a step in this direction, OMCs plan to achieve 18% blending during the ongoing ESY 2024-25. Other recent enablers include enhancement of ethanol distillation capacity to 1713 crore litre per annum; Long Term Off-take Agreements (LTOAs) to set up Dedicated Ethanol Plants (DEPs) in ethanol deficit States; encourage conversion of single feed distilleries to multi feed; availability of E-100 and E-20 fuel; launch of flexi fuel vehicles etc. All these steps also add to ease of doing business and achieving the objectives of Atmanirbhar Bharat.

Due to the visibility provided by the Government under EBP Programme, investments have happened across the country in the form of network of greenfield and brownfield distilleries, storage and logistics facilities apart from employment opportunities and sharing of value within the country among various stakeholders.  All distilleries will be able to take benefit of the scheme and large number of them are expected to supply ethanol for the EBP programme. This will help in quantifiable forex savings, crude oil substitution, environmental benefits and early payment to cane farmers.