22-Dec-2022: Ethanol Blended Petrol Programme

Public Sector Oil Marketing Companies (OMCs) have achieved over 10% ethanol blending in petrol during Ethanol Supply Year (ESY) 2021-22. Government has amended the National Policy on Biofuels – 2018 which has advanced the target of 20% blending of ethanol in petrol to ESY 2025-26 from 2030. The required ethanol quantity from sugarcane and grain based feedstocks for blending under this Programme is accordingly procured by OMCs from registered bidders/suppliers.

8-Dec-2022: Production of Bio-fuels

The Public Sector Oil Marketing Companies (OMCs) have procured 385.92 crore litres of ethanol up to 15th November, 2022 for blending in petrol  during the Ethanol Supply Year (ESY) 2021-22  (ESY: 1st December to 30th November) and 5.83 crore litres of bio-diesel for blending with diesel during the financial year 2022-23. The Oil and Gas Marketing Companies (OGMCs) have issued 3694 Letters of Intent (LoIs) to potential entrepreneurs for procurement of Compressed Bio Gas (CBG) up to 31st October, 2022.

Ethanol Blending in Petrol up to 15th November, 2022 during the ESY 2021-22 is estimated to have had an impact of over Rs.20,000 crore on the import bill of crude oil and petroleum products.

Government has notified Pradhan Mantri JI-VAN (Jaiv Indhan - Vatavaran Anukool fasal awashesh Nivaran) Yojana for promoting Second Generation (2G) ethanol production from cellulosic and lignocellulosic including petrochemical route in the country by providing financial support. Oil Central Public Sector Enterprises (CPSEs) are setting up Second Generation (2G) ethanol bio-refineries in the country.  2G ethanol plant at Panipat (Haryana) has been set up and dedicated to the Nation by the Hon’ble Prime Minister on 10.08.2022. Plants at Bathinda (Punjab), Bargarh (Odisha), Numaligarh (Assam) are in advanced stages of construction.

Research & Development centres of Oil and Gas Public Sector Enterprises have taken up research work and setting up demonstration projects on advanced biofuels at different locations. viz., Panipat (Haryana) by Indian Oil Corporation Ltd., Bengaluru (Karnataka) by Hindustan Petroleum Corporation Ltd and Noida (Uttar Pradesh) by Bharat Petroleum Corporation Ltd. Department of Bio-Technology has established 5 Centres of Excellence in Bioenergy Capacity building to promote research and production of 2nd Generation biofuels.

8-Dec-2022: Petrol Pumps Selling Biofuel

As on date, the number of Retail Outlets (ROs) selling biofuels in the country are as under:

No. of ROs selling Compressed Bio Gas (CBG) – 90

No. of ROs selling E100 – 3

In addition, Ethanol Blended Petrol is sold across the country.

Government vide Resolution dated 8th November, 2019, has revised the guidelines for authorization to market transportation fuels. The authorized entities are required to install facilities for marketing at least one new generation alternate fuel including biofuel at their proposed retail outlets within three years of operation of the said outlet subject to the entity complying with various other statutory guidelines.

Study undertaken by Automotive Research Association of India (ARAI), Indian Institute of Petroleum (IIP), Indian Oil Corporation (IOCL) and Society of Indian Automotive Manufacturers (SIAM) has indicated that E-20 blending resulted in higher reduction in Carbon Monoxide emission by 50% in two wheelers and 30% in four wheelers as compared to normal petrol. Further, Hydrocarbon emission reduced by 20% in both two wheelers and four wheelers as compared to normal petrol.

There are no definitive estimates on actual savings of foreign currency as it depends on various factors like crude prices and prevailing foreign exchange (forex) rates etc., However, Ethanol blending in Petrol upto 15th November, 2022 during the Ethanol Supply Year (ESY) 2021-22 (ESY: 1st December to 30th November) is estimated to have had an impact of over Rs. 20,000 crore on the import bill of crude oil and petroleum products.

2-Nov-2022: Cabinet approves Mechanism for procurement of ethanol by Public Sector Oil Marketing Companies (OMCs) under Ethanol Blended Petrol (EBP) Programme

The Cabinet Committee on Economic Affairs chaired by Hon’ble Prime Minister Shri Narendra Modi has approved higher ethanol price derived from different sugarcane based raw materials under the EBP Programme for the forthcoming sugar season 2022-23 during ESY 2022-23 from 1st December 2022 to 31st October, 2023:

1. The price of ethanol from C heavy molasses route be increased from Rs.46.66 per litre to Rs.49.41 per litre,
2. The price of ethanol from B heavy molasses route be increased from Rs.59.08 per litre to Rs.60.73 per litre,
3. The price of ethanol from sugarcane juice/sugar/sugar syrup route be increased from Rs.63.45 per litre to Rs.65.61 per litre,
4. Additionally, GST and transportation charges will also be payable.

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. Remunerative price to ethanol suppliers will help in early payment to cane farmers, in the process contributing to minimize difficulty of sugarcane farmers.

Government has been implementing Ethanol Blended Petrol (EBP) Programme wherein OMCs sell petrol blended with ethanol up to 10%. This programme has been extended to whole of India except Union Territories of Andaman Nicobar and Lakshadweep islands with effect from 01st April, 2019 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.

Government has notified administered price of ethanol since 2014. For the first time during 2018, differential price of ethanol based on feed stock utilized for ethanol production was announced by the Government. These decisions have significantly improved the supply of ethanol, consequently ethanol procurement by Public Sector OMCs has increased from 38 crore litre in Ethanol Supply Year 2013-14 (ESY - currently defined as ethanol supply period from 1st December of a year to 30th November of the following year) to contracts of over 452 crore litre in ongoing ESY 2021-22.  The target of achieving average 10% blending has been achieved in June, 2022, much ahead of the target date of November, 2022.

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. Other recent enablers include: enhancement of ethanol distillation capacity to 923 crore litre per annum; Long Term Off-take Agreements (LTOAs) to encourage setting up of 431 crore litre per annum capacity of Dedicated Ethanol Plants (DEPs) in ethanol deficit States by private players which is expected to bring in investments of Rs.25,000-Rs.30,000 crores in coming years; multimodal transportation of ethanol and ethanol blended petrol by railways and pipelines. All these steps add in facilitating ease of doing business and achieving the objectives of Atmanirbhar Bharat.

Government has taken many decisions for reduction of cane farmer's dues including diversion of sugar and sugar-based feedstock for production of ethanol. Now, as, large quantity of ethanol is available right from the beginning of sugar season due to conversion of sugarcane juice and B heavy molasses to ethanol, it has been decided to redefine Ethanol Supply Year as a period of ethanol supply from 1st November of a year to 31st October of the following year from 1st November, 2023 onwards. Moreover, as the Fair and Remunerative Price (FRP) of sugarcane & ex-mill price of sugar have undergone changes, there is a need to revise the ex-mill price of ethanol derived from different sugarcane based feed stocks.

21-Jul-2022: The Government is implementing the Ethanol Blended Petrol Programme and Sustainable Alternative Towards Affordable Transportation to Promote Bio-fuels

The Minister of State for Petroleum and Natural Gas, Shri Rameswar Teli in a written reply to a question in the Lok Sabha today informed that for biofuels, the Government is implementing the Ethanol Blended Petrol (EBP) Programme and Sustainable Alternative Towards Affordable Transportation (SATAT) with the broader objectives of promoting domestic agriculture sector, ensuring environmental sustainability, reducing import dependency and saving foreign exchange.

Government had earlier notified the National Policy on Biofuels – 2018 which laid down indicative target of 20% blending of ethanol in petrol and 5% blending of biodiesel in diesel by 2030 in the country. Government has now amended the National Policy on Biofuels – 2018 which has advanced the ethanol blending target of 20% blending of ethanol in petrol to ESY 2025-26 from 2030. For the ongoing Ethanol Supply Year (ESY 2021-22), Oil Marketing Companies (OMCs) have already achieved 10.16% blending as on 10th July, 2022.

With a view to promoting the use of Compressed Bio Gas (CBG) as automotive fuel, Sustainable Alternative Towards Affordable Transportation (SATAT) initiative has been launched on 01.10.2018 under which OMCs have been inviting Expression of Interest (EoI) from potential entrepreneurs to produce CBG. Till 28.2.2022, Oil PSUs have released Letter of Intent (LoIs) for establishment of 3160 CBG plants for procurement of CBG.

Used Cooking Oil (UCO) has been identified as a potential raw material for biodiesel production and public sector OMCs have floated EoIs for procurement of Biodiesel produced from UCO across 300 locations. OMCs have received offers for setting up 61 plants with a production capacity of approximately 36 crore litres per annum for manufacturing Biodiesel from UCO.

In March, 2019, Government has notified the “Pradhan Mantri JI-VAN (Jaiv Indhan - Vatavaran Anukool fasal awashesh Nivaran) Yojana” for providing financial support to integrated bio-ethanol projects for setting up Second Generation (2G) ethanol projects in the country using lignocellulosic biomass and other renewable feedstock. The total financial outlay for the scheme is Rs. 1969.50 crore for the period 2018-19 to 2023-24.  Under the PM JI-VAN Yojana, the maximum financial assistance of Rs. 150 crore per project for commercial projects and Rs. 15 crore per project for demonstration projects has been prescribed.

Under the EBP programme, the Government has already achieved the intermediate target of 10% average blending in the country in June, 2022 ahead of the target date of November, 2022.

5-Jun-2022: India has achieved the target of 10 percent ethanol blending, 5 months ahead of schedule

Government of India, with the aim to enhance India’s energy security, reduce import dependency on fuel, save foreign exchange, address environmental issues and give a boost to domestic agriculture sector, has been promoting the Ethanol Blended Petrol (EBP) Programme. The ‘National Policy on Biofuels’ notified by the Government in 2018 envisaged an indicative target of 20% ethanol blending in petrol by year 2030. However, considering the encouraging performance, due to various interventions made by the Government since 2014, the target of 20% ethanol blending was advanced from 2030 to 2025-26.

A “Roadmap for Ethanol Blending in India 2020-25” was also released by the Hon’ble Prime Minister in June, 2021 which lays out a detailed pathway for achieving 20% ethanol blending. This roadmap also mentioned an intermediate milestone of 10% blending to be achieved by November, 2022.

However, due to the coordinated efforts of the Public Sector Oil Marketing Companies (OMCs) the target of 10% blending under the programme has been achieved much ahead of the targeted timelines of November, 2022 wherein the Public Sector OMCs have attained an average 10% ethanol blending in petrol across the country.

This achievement in the course of last 8 years has not only augmented India’s energy security but also translated into a forex impact of over Rs.41,500 crores, reduced GHG emissions of 27 lakh MT and also led to the expeditious payment of over Rs.40,600 crores to farmers.

With all the initiatives taken by the Government, the EBP Programme is on track to achieve the target of 20% blending by 2025-26.

4-Apr-2022: Centre promoting Ethanol Blended Petrol (EBP) Programme with focus on domestic agriculture sector, environment benefits, reducing import dependency and savings in foreign exchange

The Minister of State for Petroleum and Natural Gas Shri Rameswar Teli in a written reply to a question in the Rajya Sabha today informed that the Government is promoting Ethanol Blended Petrol (EBP) Programme with broader objectives of providing boost to domestic agriculture sector, environment benefits, reducing import dependency and savings in foreign exchange.  Government has also notified the National Policy on Biofuels – 2018 which laid out indicative target of 20% blending of ethanol in petrol and 5% blending of biodiesel in diesel by 2030 in the country. Based on the encouraging initiatives on supply side of ethanol, Government has advanced the target of 20% blending of ethanol in petrol from 2030 to 2025-26.

The measures taken by the Government for the benefits of ethanol manufacturers  inter alia, include permitting multiple sugarcane and grain based feedstock for ethanol production, fixing feedstock wise remunerative ethanol procurement prices, introducing amended Industries (Development and Regulation) Act, 1951 for uninterrupted production, storage and movement of ethanol across the country, bringing ethanol meant for EBP Programme under lowest GST slab rate of 5% to increase production of ethanol and promote EBP Programme and introducing interest subvention schemes during 2018, 2019, 2020 and 2021 for augmentation and enhancement of ethanol production capacity in the country. Oil Marketing Companies (OMCs) have also signed long term ethanol off-take agreements with prospective project proponents to set up dedicated ethanol plants in deficit states.

21-Mar-2022: Government is promoting Ethanol Blended Petrol (EBP) Programme

The Minister of State for Petroleum and Natural Gas, Shri Rameswar Teli in a written reply to a question in the Rajya Sabha today informed that the Government is already providing subsidized food grains to more than 80 crore beneficiaries across the country through ‘PM Gareeb Kalyan Yojana’.

The Government is also promoting Ethanol Blended Petrol (EBP) Programme with broader objectives of providing boost to domestic agriculture sector, environment benefits, reducing import dependency and savings in foreign exchange. Ethanol from sugarcane route is not sufficient to achieve blending targets and for other uses. In view of surplus availability of food grains like maize and rice, ethanol from damaged food grains, maize and surplus rice with FCI has been allowed.

The Government is encouraging farmers to diversify from water intensive crops like rice, sugarcane, etc. to more sustainable crops like maize. Further, National Food Security Mission (NFSM) is being implemented in the country for increasing the production and productivity of food-grains including maize. Besides, State Governments have been requested to plan and promote maize cultivation by diverting rice/wheat area around distilleries through "special projects" under Rashtriya Krishi Vikas Yojana (RKVY) with the approval of State Level Sanctioning Committee (SLSC) constituted under the Chairmanship of Chief Secretary of State. Thus, Government aims to create a sustainable market for surplus maize beyond its consumption in the domestic poultry industry. Moreover, production of ethanol from grain like maize gives a co-product called Dried Distillers Grains with Soluble (DDGS), which is a very high source of protein and is also used as cattle feed/ poultry feed.

16-Dec-2021: Tax breaks on Ethanol

The Minister of State for Petroleum and Natural Gas, Shri Rameswar Teli in a written reply to a question in the Lok Sabha today informed that in order to promote ethanol blending, the Government has lowered Goods and Services Tax (GST) rate to 5% from 18% on ethanol meant for blending under the Ethanol Blended Petrol (EBP) Programme. The procurement price of ethanol produced from sugarcane based feed stocks like C & B heavy molasses, sugarcane juice, sugar, sugar syrup are fixed by the Government and from food grain based feed stocks by Public Sector Oil Marketing Companies on an annual basis.

The measures taken by the Government to reduce dependence on imported gasoline include a number of policy initiatives for increase in domestic crude oil production by generating quality geo-scientific data and its easy access, awarding new exploration acreage, expediting production from new development acreages and focus on production maximization from existing production acreages. It has promoted usage of biofuel in the country by notification of the National Policy on Biofuels (NPB) - 2018 which allows use of multiple feedstocks for producing bio-ethanol for increased supply of ethanol for blending with petrol. The encouraging initiatives on supply side of ethanol has prompted the Government to advance the target of 20% ethanol blending in petrol in the country from 2030 to 2025-26. Government has also notified Pradhan Mantri JI-VAN Yojna for promoting Second Generation (2G) ethanol production from cellulosic and lignocellulosic including petrochemical route in the country by providing financial support.

2-Dec-2021: Government has fixed higher ethanol price derived from different sugarcane based raw materials

The Minister of State for Petroleum and Natural Gas, Shri Rameswar Teli in a written reply to a question in the Lok Sabha today informed that Government has fixed higher ethanol price derived from different sugarcane based raw materials under the Ethanol Blended Petrol (EBP) Programme for Ethanol Supply Year (ESY 2021-22 – period from 1st December, 2021 to 30th November, 2022) as compared to preceding ESY 2020-21. The ex-mill price of ethanol fixed by the Government are from C heavy molasses route Rs.46.66 per litre, from B heavy molasses route Rs.59.08 per litre and from sugarcane juice / sugar / sugar syrup route Rs.63.45 per litre. Additionally, GST and transportation is to be paid to the suppliers.  

Government has accorded authority to Oil Public Sector Enterprises (PSEs) in the country to decide the pricing for Second Generation (2G) ethanol. Oil PSEs are setting up 2G ethanol bio refineries in the country at Panipat in Haryana, Bathinda in Punjab, Bargarh in Odisha, Numaligarh in Assam and Devangere in Karnataka.

The steps taken by the Government to promote use of bio-fuels, includes allowing use of sugarcane and food grains (maize and surplus stocks of rice with Food Corporation of India)  for conversion to ethanol; administered price mechanism for procurement of ethanol under EBP Programme including enhanced ex-mill price of ethanol year on year from ethanol supply year 2017; lowered GST rate to 5% on ethanol for EBP Programme; amendment in Industries (Development & Regulation) Act for free movement of ethanol; interest subvention scheme for enhancement and augmentation of ethanol production capacity in the country.

10-Nov-2021: Cabinet approves mechanism for procurement of ethanol by Public Sector OMCs under EBP programme revised - ethanol price for supply to Public Sector OMCs for Ethanol Supply Year 2021-22

The Cabinet Committee on Economic Affairs chaired by Prime Minister, Shri Narendra Modi, has given its approval for fixing higher ethanol price derived from different sugarcane based raw materials under the EBP Programme for the forthcoming sugar season 2021-22 during ESY 2021-22 from 1st December 2021 to 30th November 2022.

Approval is also given for the following:

1. The Price of ethanol from C heavy molasses route be increased from Rs. 45.69 per litre to Rs. 46.66 per litre,
2. The price of ethanol from B heavy molasses route be increased from Rs. 57.61 per litre to Rs. 59.08 per litre,
3. The price of ethanol from sugarcane juice, sugar / sugar syrup route be increased from Rs. 62.65 per litre to Rs. 63.45 per litre,
4. Additionally, GST and transportation charges will also be payable.
5. Government has decided that Oil PSEs should be given the freedom to decide the pricing for 2G ethanol as this would help in setting up advanced biofuel refineries in the country. It is important to note that grain-based ethanol prices are currently being decided by Oil Marketing Companies (OMCs) only.

The approval will not only facilitate the continued policy of the Government in providing price stability and remunerative prices for ethanol suppliers, but will also help in reducing the pending arrears of Cane farmers, dependency on crude oil imports and will also help in savings in foreign exchange and bring benefits to the environment.

The decision to allow Oil PSEs to decide the price of 2G ethanol would facilitate setting up advanced biofuel refineries in the country.

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.

Government has been implementing Ethanol Blended Petrol (EBP) Programme wherein Oil Marketing Companies (OMCs) sell petrol blended with ethanol up to 10%. This programme has been extended to whole of India except Union Territories of Andaman Nicobar and Lakshadweep islands with effect from 1st April, 2019 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.

Government has notified administered price of ethanol since 2014. For the first time during 2018, differential price of ethanol based on raw material utilized for ethanol production was announced by the Government. These decisions have significantly improved the supply of ethanol thereby ethanol procurement by Public Sector OMCs has increased from 38 crore litre in Ethanol Supply Year (ESY) 2013-14 to contracted over 350 crore litre in ongoing ESY 2020-21.

With a view to provide long term perspective to the stake holders, MoP&NG 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 also published the name so f eligible project proponents with whom long term agreements would be entered into for setting up ethanol plants in ethanol deficit states. Other prominent feature to provide long term perspective and attract investment includes directing OMCs to target 10% ethanol blending in petrol by the end of ensuing ESY 2021-22 and 20% by ESY 2025-26. As a step in this direction, Hon’ble Prime Minister has released the Report of Expert Committee on “Roadmap for ethanol blending in India 2020-25” on World Environment Day – 5th of June, 2021. All these would facilitate ease of doing business and achieve the objectives of Atmanirbhar Bharat initiatives.

Consistent surplus of sugar production is depressing sugar price. Consequently, sugarcane farmer’s dues have increased due to lower capability of sugar industry to pay the farmers. Government has taken many decisions for reduction of cane farmer’s dues. With a view to limit sugar production in the Country and to increase domestic production of ethanol, Government has taken multiple steps including, allowing diversion of B heavy molasses, sugarcane juice, sugar and sugar syrup for ethanol production. Now, as the Fair and Remunerative Price (FRP) of sugarcane and ex-mill price of sugar have undergone changes, there is a need to revise the ex-mill price of ethanol derived from different sugarcane based raw materials.

Further, to kick-start the Second Generation (2G) ethanol programme (which can be produced from agricultural and forestry residues, e.g. rice & wheat straw/corn cobs & Stover/bagasse, woody biomass), few projects are being set up by Oil PSEs taking financial assistance from the Government’s “Pradhan Mantri JI-VAN Yojana” approved by the CCEA in the past. These projects are likely to start commissioning from ensuing ESY 2021-22.

2-Aug-2021: Government has taken various steps towards achieving 20% blending of ethanol in petrol

The Minister of State for Petroleum and Natural Gas, Shri Rameswar Teli in a written reply to a question in the Lok Sabha today informed that the Government has taken various steps towards achieving 20% blending of ethanol in petrol which includes allowing use of sugarcane and food grains (maize and surplus stocks of rice with Food Corporation of India)  for conversion to ethanol; administered price mechanism for procurement of ethanol under EBP Programme including enhanced ex-mill price of ethanol year on year from ethanol supply year 2017; lowered GST rate to 5% on ethanol for EBP Programme; amendment in Industries (Development & Regulation) Act for free movement of ethanol; interest subvention scheme for enhancement and augmentation of ethanol production capacity in the country. At present average ethanol blending percentage in petrol for the ongoing Ethanol Supply Year 2020-21 is 8%, as on 26.07.2021.

The present percentage of blending of biodiesel in diesel is less than 0.1 Percent. The National Policy on Bio fuels – 2018 prescribes as indicative target of 5% blending of biodiesel in diesel by 2030.

Availability of biodiesel has been low in the last few years due to increase of price and non-availability of feed stock for biodiesel. Some biodiesel is also being marketed by agencies other than Oil Marketing Companies.

Further, to increase the supply of Biodiesel in the country, OMCs are regularly floating Expression of Interest (EoI) to encourage the production of biodiesel from Used Cooking Oil.

26-Jul-2021: Government promoting use of ethanol produced from sugarcane and food grains under EBP Programme

Government of India through Oil Marketing Companies (OMCs) is implementing Ethanol Blended Petrol (EBP) Programme, wherein ethanol is being blended in petrol to achieve the objectives of reducing import dependence, promote clean fuel and provide boost to agriculture. Ministry of Petroleum & Natural Gas vide notification dated 5th February, 2019 directed Oil Marketing Companies (OMCs) to sell 10% ethanol blended petrol as per Bureau of Indian Standards (BIS) specifications.

Government, since 2014, has allowed procurement of ethanol produced from other non-food feedstock besides molasses, like cellulosic and lignocelluloses materials like cotton stalk, wheat straw, rice straw, bagasse, bamboo etc. including petrochemical route, subject to meeting the relevant BIS standards. The steps taken by the Government to promote use of ethanol so as to provide employment opportunities in rural area includes, allowing use of sugarcane and food grains (maize and surplus stocks of rice with Food Corporation of India)  for conversion to ethanol; administered price mechanism for procurement of ethanol under EBP Programme including enhanced ex-mill price of ethanol year on year from ethanol supply year 2017; lowered GST rate to 5% on ethanol for EBP Programme; amendment in Industries (Development & Regulation) Act for free movement of ethanol; interest subvention scheme for enhancement and augmentation of ethanol production capacity in the country.

22-Jul-2021: Use of A Blend of 12 percent and 15 percent Ethanol in Gasoline as Automotive Fuels Facilitated

This Ministry has notified G.S.R. 439(E) dated 28-06-2021 to facilitate use of a blend of 12 percent and 15 percent ethanol in gasoline as automotive fuels. Comments and objections have been solicited from concerned stakeholders.  The target date for achieving 20 percent ethanol blending with petrol has been advanced by five years to 2025 to minimise pollution and reduce dependence on import. NITI Aayog has prepared a roadmap for Ethanol Blending India 2020-25. Government is encouraging the use of electric vehicles and vehicles operating on alternative fuels by providing incentives.

19-Jul-2021: Ethanol Blending has Improved from 1.53% during Ethanol Supply Year 2013-14 to 7.93% ongoing ESY 2020-21

E-100 pilot projects has been launched at Pune city by Public Sector Oil Marketing Companies (OMCs) on June 05, 2021. With a view to enhance fuel choice and facilitate sale of E-100 fuel, MoP&NG vide its order dated March 22, 2021 has amended the Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order, 2005 by permitting the direct sale of Bio-ethanol (E100) by an oil company for use as standalone fuel or blending with motor spirit, for compatible automobiles to all consumers, in accordance with the standards specified by the Bureau of Indian Standards.

The Notified National Policy on Biofuels – 2018, provided an indicative target of blending 20% ethanol in petrol by 2030. Government has undertaken several supply and demand side interventions since 2014 which has enabled improvement in ethanol blending from average 1.53% during Ethanol Supply Year (ESY) 2013-14 to 7.93% during ongoing ESY 2020-21 as on July 12, 2021. An Interdepartmental Expert Committee under the Chairmanship of Additional Secretary NITI Aayog has submitted a “Roadmap for Ethanol Blending in India 2020-25” which outlines the journey for 20% ethanol blending in the country. Ministry of Petroleum and Natural Gas has published a Notification dated June 02, 2021, wherein, it has been stated that OMCs shall sell ethanol blended petrol with percentage of ethanol upto 20% as per BIS Specifications in the whole of India and Union Territories and shall come into effect from April 01, 2023.

15-Jun-2021: Ethanol distillation capacities to double by 2025 and achieve 20 % blending target:- Secretary, Department of Food, Public Distribution

Secretary, Department of Food and Public Distribution, Shri Sudhanshu Pandey today briefed the media persons about ethanol blending with petrol (EBP) program.

The roadmap for ethanol blending in India 2020-25 has been released by the Prime Minister Shri Narendra Modi on 5th June, 2021 i.e. on World Environment day. Notification regarding making E 20 fuel available by April, 2023 has been issued.

It may be noted that BIS specifications for E12 & E15 blending have also been notified on 2nd June, 2021. Pilot project of E 100 dispensing from 3 locations at Pune was also launched by the Prime Minister.

Secretary, DFPD said that as a result of various measures taken to address demand and supply side issues, it is likely that ethanol distillation capacities in the country would be more than doubled by 2025 and we would be able to achieve 20 % blending target.

Shri Pandey said that EBP will bring positive impact on country’s economy too. He said that it would promote ethanol as a fuel which is indigenous, non-polluting and virtually inexhaustible and would improve the environment and the eco-system as use of E20 fuel reduces carbon monoxide emission by 30-50% and hydrocarbon by 20%.

To achieve blending targets, Government is encouraging sugar mills and distilleries to enhance their distillation capacities for which Government is facilitating them to avail loans from banks for which interest subvention up to 6% is being borne by Government.

He said that the production of fuel grade ethanol and its supply to OMCs has increased by 5 times from 2013-14 to 2018-19. In ESY 2018-19, we touched a historically high figure of about 189 crore litres thereby achieving 5% blending. It is expected that in current ethanol supply year 2020-21, more than 300 crore litres ethanol is likely to be supplied to OMCs to achieve 8 to 8.5 % blending levels. It is also likely that we would be achieving 10% blending target by 2022.

He further informed that due to upcoming investment of about Rs 41,000 Crore in capacity addition / new distilleries, various new employment opportunities will be created in rural areas and strengthen the agricultural economy. Shri Pandey said this would save foreign exchange of more than Rs 30,000 Cr on account of crude oil import bill and would reduce dependence on imported fossil fuel thereby would help in achieving the goal of Atmanirbhar Bharat in petroleum sector.

Shri Pandey said in the next sugar season 2021-22, about 35 LMT of sugar is estimated to be diverted & by 2025 about 60 LMT of sugar is targeted to be diverted to ethanol, which would solve the problem of excess sugarcane/ sugar and would also help sugar mills in clearing cane price dues of farmers. Shri Pandey said that in past 3 sugar seasons about Rs. 22,000 crore revenue was generated by sugar mills/ distilleries from sale of ethanol to OMCs.

Shri Pandey said that about 5 crore sugarcane farmers & their families and 5 lakh workers associated with sugar mills & other ancillary activities would be benefitted with this intervention. Sugarcane farmers will get timely payment of sugarcane dues as the realization from sale of ethanol is much faster than sale of sugar.

It may be noted that India is facing a situation of plenty with surplus sugar, leading to liquidity problem to sugar mills and delayed payments of cane dues. The Government is encouraging sugar mills to divert excess sugarcane to ethanol which is blended with petrol.

Secretary, DFPD further briefed that till year 2014, ethanol distillation capacity of molasses-based distilleries was less than 200 crore litres. Supply of ethanol to OMCs was only 38 crore litres with blending levels of only 1.53 % in ethanol supply year (ESY) 2013-14. However, in past 6 years due to the policy changes made by the Government, the capacity of molasse- based distilleries have been doubled and are currently at 445 crore litres. Capacity of grain-based distilleries are presently about 258 crore litres.

Shri Pandey added that for ethanol supply year 2020-21, Government has now increased the ex-mill price of ethanol derived from various feed stocks on the basis of raw material cost and conversion costs. Shri Pandey said to increase production of fuel grade ethanol, Govt. is also encouraging distilleries to produce ethanol from rice available with FCI and maize.

Government has fixed remunerative price of ethanol from maize & FCI rice. To produce ethanol/alcohol from food grains, more than 165 LMT of additional food grains would be utilized; this extra consumption of surplus food grains would ultimately benefit the farmers as they will get better price for their produce and assured buyers and thus, will also increase the income of crores of farmers across the country.

Briefing about hand sanitizers, he said that prior to Covid-19, the annual production of hand sanitizer was about 10 lakh litre per annum and was mainly used in the hospitals.  Keeping in view the crucial role of sanitizer in the fight against COVID-19, DFPD coordinated with Industry and State Governments to encourage industry to produce sanitizers.

With the collective efforts of DFPD & State Governments, more than 900 distilleries/independent units were accorded permissions to produce hand sanitizer. Installed capacity for production of hand sanitizer increased substantially to 30 lakh litre per day.

As on 31.05.2021, around 3.9 Crore litre of hand sanitizer has been produced. In view of surplus availability of sanitizer in the country, export of sanitizer has also been allowed earning tremendous amount of goodwill for the country Shri Pandey added.

1-May-2021: Price of Food Corporation of India rice used in ethanol production remains unchanged for FY 2021-22

With the vision to boost agricultural economy, to reduce dependence on imported fossil fuel, to save foreign exchange on account of crude oil import bill & to reduce the air pollution, Government has fixed target of 10% blending of fuel grade ethanol with petrol by 2022 & 20% blending by 2025.

With a view to support sugar sector and in the interest of sugarcane farmers, the Government has also allowed production of ethanol from B-Heavy Molasses, sugarcane juice, sugar syrup and sugar; and encouraging sugar mills to divert excess sugarcane to ethanol. In previous sugar season 2019-20 about 9 LMT of sugar was diverted to ethanol. In current sugar season 2020-21, it is likely that more than 20 LMT of excess sugar would be diverted to ethanol. By 2025, it is targeted to divert 50-60 LMT of excess sugar to ethanol, which would solve the problem of high inventories of sugar, improve liquidity of mills thereby help in timely payment of cane dues of farmers.  In past 3 sugar seasons about Rs. 22,000 cr revenue was generated by sugar mills/ distilleries from sale of ethanol to OMCs.

To increase production of fuel grade ethanol and to achieve blending targets, the Govt of India has allowed use of maize and rice with FCI for production of ethanol. Government has declared that rice available with FCI would continue to be made available to distilleries in coming years. The extra consumption of surplus food grains would ultimately benefit the farmers as they will get better price for their produce and assured buyers; and thus will also increase the income of crores of farmers across the country.

Government has fixed price of ethanol from maize as Rs 51.55/litre & rice available with FCI as Rs 56.87/litre for ethanol supply year 2020-21. For FY 2020-21, Government has fixed the price of FCI rice to Rs 2000/quintal for production of ethanol. For FY 2021-22, Government has decided to continue the price of FCI rice to Rs 2000/quintal for production of ethanol. This will give confidence to industry about the stability in raw material price and its availability. For the purpose of supply of surplus rice for the production of ethanol, distilleries are at liberty to choose the nearest FCI depot as per requirement/logistics.

In current ethanol supply year (ESY) 2020-21 (December to November) to achieve 8.5% blending target, about 325 Cr litres ethanol is required to be supplied to OMCs. As on 26.04.2021, about 349 cr. litres ethanol have been allocated by OMCs to sugar mills/ distilleries,  out of which  contracts of about 302 cr. litres have been signed by distilleries &124 cr. litres have been supplied. Efforts are being made by DFPD &MoPNG / OMCs to ensure achievement of blending target. Also, in next ESY 2021-22, it is likely to supply more than 400 cr. litres of ethanol to OMCs to achieve 10 % blending.

With a view to increase existing capacities further, DFPD has notified modified interest subvention scheme on 14.01.2021 for setting up new grain based distilleries/ expansion of existing grain based distilleries, dual feed distilleries & molasses based distilleries to produce ethanol & production of ethanol from other 1G feed stocks.  422 proposals with a capacity of 1684 cr. litres for a loan amount Rs. 42000 crore have been approved by DFPD. It is expected that from the proposals approved, more than 600 cr. litres may come up in next 2 to 4 years. Thus, the ethanol distillation capacity from these projects and ongoing projects may reach to 1500 cr. litres by 2024-25 which would be sufficient to achieve 20% blending target.

Sugarcane and ethanol is produced mainly in three states viz Uttar Pradesh, Maharashtra and Karnataka. Transporting ethanol to far flung States from these three states involves huge transportation cost.  By bringing new grain based distilleries in the entire country would result in distributed production of ethanol and would save a lot of transportation cost and thus prevent delays in meeting the blending target & would benefit the farmers across the country.

For production of ethanol, there is sufficient availability of feed stocks; & Govt. has also fixed remunerative prices of ethanol derived from various feed stocks. Moreover, OMCs being the assured buyer for ethanol has given comfort for purchase of ethanol from distilleries for next 10-15 years. Hence, these ethanol projects are viable. Ministry of Environment, Forest & Climate Change has also streamlined the process of getting environment clearance (EC) for ethanol projects. Department of Financial Services and State Bank of India have also issued Standard Operating Procedure (SOP) for sanctioning and disbursal of loans for ethanol projects which would expedite sanctioning and disbursal of loans.

Production of ethanol would not only facilitate diversion of excess sugar to ethanol but would also encourage farmers to diversify their crops to cultivate particularly maize/corn which needs lesser water. It would enhance production of ethanol from various feed stocks thereby, facilitate in achieving blending targets of ethanol with petrol and would reduce import dependency on crude oil, thereby, realizing the goal of Atmanirbhar Bharat. It will also enhance income of farmers as setting up of new distilleries would not only increase demand of their crops but would assure farmers of getting better price for their crops.

8-Mar-2021: Government promoting Ethanol Blending of Petrol

Government has been promoting use of ethanol as a blend stock with main automotive fuel like petrol in line with the National Policy on Biofuels -2018 under the Ethanol Blended Petrol (EBP) Programme. This policy envisages an indicative target of blending 20% ethanol in petrol by 2030.

Department of Food & Public Distribution (DFPD) has informed that the production of ethanol varies from distillery to distillery and depends upon various factors viz. cost of raw material, conversion cost, efficiency of distillery plants etc. Several supply and demand side interventions have been initiated by the Government including enhancing scope of raw material for ethanol production and fixing remunerative prices of ethanol from different feedstocks being utilized for ethanol production. Based on the ethanol supply offers, Public Sector Oil Marketing Companies (OMCs) have allocated 325.5 crore liters for Ethanol Supply Year (ESY) (period from Dec. to Nov.) 2020-21 to be blended with petrol under the EBP Programme.

In order to enhance the ethanol production capacity in the country, DFPD has informed that Government has notified a modified scheme on January 14, 2021 for extending financial assistance in the form of interest subvention on loans advanced by Banks/NCDC/IREDA/NBFCs and any other financial institutions to project proponents for different activities viz. setting up of new distilleries, expansion of existing capacity, installation of Zero Liquid Discharge (ZLD) System and Molecular Sieve Dehydration (MSDH) Column, etc. for production of first generation (1G) ethanol from feedstock such as cereals (rice, wheat, barley, corn, sorghum), sugarcane and sugar beet, etc. including granaries and surplus rice with Food Corporation of India (FCI). The Government also fixed remunerative prices of ethanol from such feedstock i.e. Rs 51.55 per litres from damaged food grains and Rs 56.87 per litres from FCI rice.

10-Feb-2021: Indigenous Procurement of Ethanol

Ministry of Petroleum and Natural Gas has published an ‘Ethanol Procurement Policy on a long term basis under Ethanol Blended Petrol (EBP) Programme’ on 11th October 2019 which broadly covers the modalities for long term procurement of ethanol, proposed mechanism for long term procurement contracts, pricing methodology, etc.

Currently the major sources of ethanol procurement are sugarcane juice, sugar, sugar syrup, B-heavy molasses, C-heavy molasses, Damaged food grains unfit for human consumption, surplus rice available with Food Corporation of India (FCI) and maize.

The total quantity of ethanol procured during the last 5 years by the Public Sector Oil Marketing Companies (OMCs) are as under:

*ESY is from 1st December of a year to 30th November of the next year

9-Feb-2021: Government notified scheme to provide financial assistance to project proponents for enhancing ethanol distillation

Government has notified scheme for extending financial assistance to project proponents for enhancement of ethanol distillation capacity or to set up distilleries for producing 1st Generation (1G) ethanol from feed stocks such as cereals (rice, wheat, barley, corn & sorghum), sugarcane, sugar beet etc. vide notification dated 14.01.2021. Under the scheme, Government would bear interest subvention for five years, including one year moratorium, against the loan availed by project proponents from banks @ 6% per annum or 50% of the rate of interest charged by banks, whichever is lower, for setting up of new distilleries; expansion of existing distilleries; converting existing distilleries to dual feedstock; setting up of new dual feed distilleries; expansion of existing dual feed distilleries; and installation of Molecular Sieve Dehydration (MSDH) column etc.

During previous Ethanol Supply Year (ESY) 2019-20 (December- November), about 173 crore litre of ethanol was supplied by sugar mills and distilleries to Oil Marketing Companies (OMCs). In the current ESY 2020-21, against Letter of Intent (LoI) quantity of 324.69 crore litre and contracted quantity of 269.88 crore litre, about 48.73 crore litre of ethanol has been supplied to OMCs, as on 01.02.2021.

State Governments/ UTs have been advised to promote the scheme to the entrepreneurs and encourage them to participate in the scheme so that the target set by the Government could be achieved well within the timeline. State Governments have also been requested to facilitate entrepreneurs in arranging land for the project, getting early environment clearance etc. in setting up of distilleries. In this regard, webinars/meetings have been organised with State Governments/ UTs, industry, concerned departments of Central Government and other stakeholders.

20-Nov-2020: Diversion of excess sugar to ethanol to enhance income of sugarcane farmers and to achieve ethanol blending target

In the normal sugar season, about 320 LMT of sugar is produced against domestic consumption of 260 LMT.  This 60 LMT of surplus sugar which remains unsold, blocks funds of sugar mills to the tune of about Rs. 19,000 crore every year thereby affecting liquidity positions of sugar mills resulting in accumulation of cane price arrears of farmers. To deal with surplus stocks of sugar, sugar-mills are being encouraged by the Government to export sugar, for which Government has been extending financial assistance. However, India being a developing country can export sugar by extending financial assistance for marketing and transport only up to year 2023 as per WTO arrangements. So, as a long term solution to deal with surplus sugar, to improve sustainability of sugar industry and to ensure timely payment of cane dues to farmers, Government has been encouraging diversion of excess sugarcane & sugar to ethanol for supplying to Oil Marketing Companies for blending with petrol which not only would reduce import dependency on crude oil, promote ethanol as a fuel which is indigenous & nonpolluting, but will also enhance income of sugarcane farmers.

Earlier, the Government had fixed a target of 10% blending of fuel grade ethanol with petrol by 2022 and 20% blending by 2030 but now Government is preparing a plan to prepone achievement of  20% blending target. However, as the existing ethanol distillation capacity in the country is not sufficient to produce ethanol to achieve blending targets, Government is encouraging sugar mills, distilleries and entrepreneurs to set up new distilleries and to expand their existing distillation capacities and is also extending financial assistance by way of interest subvention for 5 years at 6% maximum rate of interest against the loans availed by sugar mills/ distilleries from banks for setting up their projects. In past 2 years, loans of about Rs. 3600 crores have been sanctioned for 70 such ethanol projects (molasses based distilleries) which involve capacity enhancement of 195 crore litres; out of these 70 projects, 31 projects have been completed adding a capacity of 102 crore litres so far. With the efforts made by Government, the existing installed capacity of molasses based distilleries has reached to 426 cr ltrs. Under the ethanol interest subvention scheme for molasses based distilleries, Government in September, 2020 has opened a window for 30 days to invite more applications from sugar mills/ distilleries, which were examined by DFPD; about 185 applicants (85 sugar mills and 100 molasses based standalone distilleries) are being granted in principle approval for availing loan amount of Rs. 12,500 crore for capacity addition of about 468 crore litres per annum. It is likely that these projects would be completed in another 3-4 years, thus help in achieving the desired blending target.

However, as the blending targets cannot be achieved only by diverting sugarcane / sugar to ethanol therefore, Government is also encouraging distilleries to produce ethanol from other feed stocks like grains, etc. for which the present distillation capacity is not sufficient. Therefore, concerted efforts are being made by Govt. to enhance ethanol distillation capacity in the country by 720 crore litre for producing ethanol from 1st Generation (1G) feed stocks like sugarcane, molasses, grains, sugar beet, sweet sorghum etc. With use of other feedstocks, ethanol can be produced in non-sugarcane states also and this will help in distributed ethanol production in the country.

In view of surplus of availability of rice in the country, Government is making efforts for production of ethanol from surplus rice with FCI to supply to Oil Marketing Companies to mix with petrol in Ethanol Supply Year 2020-21 (December-November). Efforts are also being made to produce ethanol from maize in states which have sufficient production of maize.

In the current Ethanol Supply Year 2019-20 only 168 crore litres of ethanol is likely to be supplied to OMCs for blending with petrol thereby achieving 4.8% blending levels. However, in the ensuing Ethanol Supply Year 2020-21, efforts are being made to supply 325 crore ltrs of ethanol to OMCs thereby achieving 8.5% blending; and in the ethanol supply year 2021-22 ending in November, 2022 efforts are being made to achieve 10% blending target which is quite possible in view of the concerted efforts made by the Government. For Year 2020-21, bids of 322 crore litres (289 crore from molasses and 34 crore litre from grains) have already been received in first tender floated by OMCs and in subsequent tenders more quantity from molasses and grain based distilleries will come, thus Government will be able to achieve 325 crore litre and 8.5% blending target.

In next few years with 20% ethanol blending with petrol, Government will be able to reduce import of crude oil, a step towards being Aatma Nirbhar in the  Petroleum sector and this will also help in increasing the income of farmers and creating additional employment in distilleries.

29-Oct-2020: Cabinet approves Mechanism for procurement of ethanol by Public Sector Oil Marketing Companies under Ethanol Blended Petrol Programme

The Cabinet Committee on Economic Affairs chaired by the Prime Minister Shri Narendra Modi has approved the following, including fixing higher ethanol price derived from different sugarcane based raw materials under the Ethanol Blended Petrol (EBP) Programme for the forthcoming sugar season 2020-21 during Ethanol Supply Year (ESY)  2020-21 from 1st December 2020 to 30th November 2021:

1. The price of ethanol from C heavy molasses route be increased from Rs.43.75 per lit to Rs.45.69 per litre,
2. The price of ethanol from B heavy molasses route be increased from Rs.54.27 per lit to Rs.57.61 per litre,
3. The price of ethanol from sugarcane juice / sugar / sugar syrup route be increased from Rs.59.48 per lit to Rs.62.65 per litre,
4. Additionally, GST and transportation charges will also be payable. OMCs have been advised to fix realistic transportation charges so that long distance transportation of ethanol is not disincentivized,
5. In order to offer fair opportunity to the localized industry within the State and reduce crisscross movement of ethanol, Oil Marketing Companies (OMCs) shall decide the criteria for priority of ethanol from various sources taking in account various factors like cost of transportation, availability, etc. This priority will limit to the excisable boundaries of the State / UT for production in that State / UT. Same order of preference will be given thereafter for import of ethanol from other States wherever required.

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. Remunerative price to ethanol suppliers will help in reduction of cane farmer’s arrears, in the process contributing to minimizing difficulty of sugarcane farmers.

Government has been implementing Ethanol Blended Petrol (EBP) Programme wherein OMCs sell petrol blended with ethanol up to 10%. This programme has been extended to whole of India except Union Territories of Andaman Nicobar and Lakshadweep islands with effect from 01st April, 2019 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.

Government has notified administered price of ethanol since 2014. For the first time during 2018, differential price of ethanol based on raw material utilized for ethanol production was announced by the Government. These decisions have significantly improved the supply of ethanol thereby ethanol procurement by Public Sector OMCs has increased from 38 crore litre in Ethanol Supply Year (ESY) 2013-14 to contracted over 195 crore litre in ESY 2019-20.

With a view to provide long term perspective to the stake holders, MoP&NG 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% to 1% extending a benefit of around Rs. 400 Cr. to ethanol suppliers. OMCs have also reduced the applicable penalty on non-supplied quantity from earlier 5% to 1% extending a benefit of around Rs.35 Cr. to suppliers. All these would facilitate ease of doing business and achieve the objectives of Atmanirbhar Bharat initiatives.

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

With a view to limit sugar production in the Country and to increase domestic production of ethanol, Government has taken multiple steps including, allowing diversion of B heavy molasses, sugarcane juice, sugar and sugar syrup for ethanol production. As the Fair and Remunerative Price (FRP) of sugarcane and ex-mill price of sugar have undergone changes, there is a need to revise the ex-mill price of ethanol derived from different sugarcane based raw materials.

22-Aug-2020: Government has 10% blending target for mixing ethanol with petrol by 2022 & 20% blending target by 2030

Government has taken various measures to improve viability of sugar industry, thereby enabling sugar mills to make timely payment of cane dues of farmers. Going forward, diversion of excess sugarcane and sugar is the long term solution for addressing the problem of excess stock and improving viability of sugar industry. Ethanol is a green fuel & its blending with petrol also saves the country’s foreign exchange.

A meeting co-chaired by Secretary (Food & Public Distribution), Secretary (MoPNG) and Secretary (DFS) was held with the representatives of leading banks and Oil Marketing Companies, Cane Commissioners of major sugar producing States and sugar industry associations on 21st August 2020, in which ways and means to increase the supply of ethanol to OMCs was discussed to achieve the objective of the Government to increase blending percentage in petrol.  It was agreed that as producers of ethanol (sugar mills), buyers of ethanol (OMCs) and the lenders (banks) are willing to enter into a tri-partite agreement (TPA) about producing, buying and paying for the ethanol through an escrow account etc., the banks can consider giving loans to sugar mills even with weak balance sheets. This would facilitate mills to avail loans from banks to set up new distilleries or to expand their existing distilleries, thereby enhancing the overall distillation capacity in the country and thus would help in achieving the blending target under Ethanol Blended with Petrol programme. It was assured by the States and industry that efforts would be made to increase supply of ethanol in the current as well as in ensuing ethanol supply years.

During last ethanol supply year 2018-19 about 189 crore litres of ethanol was supplied by sugar mills and grain based distilleries to OMCs thereby achieving 5% blending target and in current ethanol supply year 2019-20, efforts are being made to supply 190-200 crore litres of ethanol for blending with petrol to achieve 5.6% blending. The Government has 10% blending target for mixing ethanol with petrol by 2022 & 20% blending target by 2030. To achieve the objective of the Government, Department of Food & Public Distribution is regularly holding meetings with Department of Financial Services; Ministry of Petroleum & Natural Gas; Ministry of Environment, Forest & Climate Change; State Governments; representatives from Sugar Industry and Banks.

With a view to achieving blending targets, Government is encouraging sugar mills and molasses based standalone distilleries to enhance their ethanol distillation capacity. Soft loans of about Rs. 18600 crores are being extended through banks to 362 projects of 600 crore litre capacity for enhancement and augmentation of ethanol production capacity, for which an interest subvention of about Rs.4045 crore for five years is being borne by the Government. So far loans have been sanctioned to 64 project proponents & completion of these projects would increase ethanol distillation capacity by 165 crore litres in another two years. Thus the ethanol distillation capacity in the country would increase from 426 crore litres per annum to about 590 crore litres per annum by 2022.

To encourage sugar mills to divert excess sugarcane to produce ethanol for blending with petrol, the Government has allowed production of ethanol from B-Heavy Molasses, sugarcane juice, sugar syrup and sugar; and has also fixed the remunerative ex-mill price of ethanol derived from these feed-stocks. The State-wise targets for ethanol manufacture have also been fixed. Sugar mills / distilleries have been advised to utilize at least 85 % of their existing installed capacity to produce ethanol. Sugar mills having distillation capacity have been advised to divert B-heavy molasses and sugar syrup for producing ethanol to utilize their capacity to maximum extent; and  those sugar mills which do not have distillation capacity should produce B-Heavy molasses and should tie up with distilleries which can produce ethanol from B-Heavy molasses. States have also been requested to ensure smooth movement of molasses & ethanol.

5-Nov-2019: No separate Environmental Clearance required to produce additional Ethanol from B-heavy molasses

Giving further benefits to farmers and sugar industry, the Central Government has declared that no separate environmental clearance is required to produce additional ethanol from B-heavy molasses as it does not contribute to the pollution load.

With various incentives provided by the Government of India, sugar mills are expected to undertake production of ethanol from B-heavy Molasses and other by-products/products, resulting in incidental increase in the production of ethanol without any increase in the total pollution load in the existing distilleries or sugar mills to which environmental clearance have already been granted.

To obviate the need for undertaking fresh Environmental Impact Assessment (EIA) or public consultation in all such cases of increase in production capacity, the government has given a clarification relating to issuance of environmental clearance in order to facilitate the sugar mills to undertake additional production of ethanol from B-heavy Molasses in place of using C-heavy Molasses without any increase in the total pollution load.

It has been clarified that all such proposals intended to undertake additional production of ethanol from B-heavy Molasses/Sugar cane juice/ Sugar syrup/ Sugar, may be considered under the provisions of 7 (ii) (a) of EIA Notification, 2006 by the concerned Expert Appraisal Committee for grant of environmental clearance.

3-Sep-2019: CCEA approves higher prices for ethanol

The Cabinet Committee on Economic Affairs (CCEA) approved higher price for ethanol derived from different raw materials under the Ethanol Blended Petrol (EBP) Programme for the forthcoming sugar season 2019-20.

The price of ethanol from "C heavy molasses route" has been increased from Rs 43.46 per litre to Rs 43.75 per litre. The price of ethanol from "B heavy molasses route" has been increased from Rs 52.43 per litre to Rs 54.27 per litre. The price of ethanol from "sugarcane juice/sugar/sugar syrup route" has been fixed at Rs 59.48 per litre.

The oil marketing companies have been advised to continue giving priority to ethanol sourced from sugarcane juice, sugar and sugar syrup followed by B heavy molasses, C heavy molasses, and damaged food grains and other sources.

Remunerative price to ethanol suppliers will help in reducing arrears of cane farmers and reducing their difficulties.

Against the target of 5 per cent blending, about 1.5 per cent blending was being carried out when the BJP-led government came to power in 2014. The level of blending has gone up to 6.20 per cent and the target is to reach 10 per cent level by 2021-22 to reduce India's import dependency. The steps taken by the government will also result in saving US dollar one billion of oil imports and reducing crude import by two million metric tonnes.

The revised prices will be applicable for "ethanol supply year" from December 1, 2019, to November 30, 2020.

7-Mar-2019: Scheme for extending financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity

The Cabinet Committee on Economic Affairs, chaired by Hon'ble Prime Minister Shri Narendra Modi has given its approval for funds amounting to Rs.2790 crore towards interest subvention for extending indicative loan amount of Rs.12900 crore by banks to the sugar mills under “Scheme for extending financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity” for the 268 applications/proposals, in addition to Rs.1332 crore already approved by CCEA in June, 2018.

CCEA has also approved Rs.565 crore towards interest subvention for extending indicative loan amount of Rs.2600 crore by banks to the molasses based standalone distilleries to augment capacity through installation of incineration boilers and other methods in the existing distilleries for achieving ZLD and additional equipment for ethanol production as well as for setting up of new standalone distilleries for ethanol production. A separate scheme for the molasses based standalone distilleries would be formulated accordingly by Department of Food & Public Distribution.

In continuation of the earlier scheme approved by the Cabinet Committee on Economic Affairs (CCEA) in June, 2018 and with a view to support sugar sector and in the interest of sugarcane farmers, the CCEA chaired by the Prime Minister has approved the proposal for extending soft loans of about Rs. 15500 crores through banks to sugar mills and molasses based standalone distilleries under the Scheme for extending financial assistance for enhancement and augmentation of ethanol production capacity for which Government will bear further interest subvention amounting to Rs. 3355 crore for five years including moratorium period of one year. As a result of implementation of the scheme being notified after this decision of CCEA and the earlier scheme approved by CCEA in June, 2018, the country will have sufficient capacity to divert surplus sugar during surplus phase for production of ethanol.

Government has notified National Policy on Bio-fuels in year 2018 under which diversion of B-heavy molasses and sugarcane juice to produce ethanol has been allowed in surplus seasons. In order to augment ethanol production capacity and thereby also allow diversion of sugar for production of ethanol, in earlier approved scheme, soft loan is being extended through banks to the sugar mills for setting up new distilleries/ expansion of existing distilleries and installation of incineration boilers or installation of any method as approved by Central Pollution Control Board for Zero Liquid Discharge (ZLD) for which Government had approved interest subvention of Rs. 1332 crore. In principle approval was accorded by Government for extending soft loans of about Rs. 6139 crores to 114 sugar mills under that scheme.

However, in order to further enhance and augment the ethanol production capacity in the country, it has now been decided by Government to extend soft loans amounting to Rs 12900 crores to some more sugar mills for setting up new distilleries/ expansion of existing distilleries and installation of incineration boilers or installation of any method as approved by Central Pollution Control Board for Zero Liquid Discharge for which Government will bear interest subvention of Rs. 2790 crore. About 268 sugar mills are likely to be benefitted as a result of this measure.

Besides, to further optimize the ethanol production capacity, it has also been decided to extend soft loans amounting to Rs. 2600 crores by banks to the molasses based stand-alone distilleries to augment capacity through installation of incineration boilers and other methods in the existing distilleries for achieving ZLD and additional equipment for ethanol production as well as for setting up of new stand-alone distilleries for ethanol production for which Government  will bear interest subvention of Rs. 565 crore.

This decision would further help in achieving blending target for mixing ethanol and in achieving the objectives of National Bio-Fuel Policy, 2018 and to reduce sugar inventories by diversion of B-Heavy molasses and sugarcane juice for ethanol production and thereby sacrificing sugar during surplus phase.  It will also improve liquidity of sugar mills by way of value addition to their revenues from supply of ethanol under Ethanol Blended Petrol Programme (EBP) thereby facilitating them to clear cane price dues of farmers.

Benefits: The approval of interest subvention will help in:

• improving liquidity of sugar mills by way of value addition to their revenues from supply of ethanol under Ethanol Blended Petrol Programme (EBP);
• reducing sugar inventories and thereby facilitate timely clearance of cane price dues of farmers and
• achieving 10% blending target of EBP.

12-Feb-2019: Production of Ethanol

Ethanol produced from molasses in the country is primarily used for supply under Ethanol Blended Petrol (EBP) Programme. During last three ethanol years (December-November) i.e. 2015-2016, 2016-2017 & 2017-2018, ethanol supplies under EBP have been respectively 111 crore litres, 66.5 crore litres and 151 crore litres. During current ethanol year 2018-2019; contracts for supply of about 235 crore litres of ethanol have so far been finalized.

As indicated in reply to part (a) above, the production and supply of ethanol during last ethanol year i.e. 2017-2018 was about 151 crore litres as against the required target of 314 crore litres. The shortfall has been mainly due to shortage of ethanol production capacity in the country.

The fuel grade ethanol has specified purity level of 96.6% or above. For the purpose of blending, there is no difference between the ethanol produced either from molasses or directly from sugarcane juice.

As per National Policy on Bio-Fuels -2018, fuel grade ethanol is now allowed to be produced directly from sugarcane juice. Suitable amendments to this effect have also been made in the Sugarcane (Control) Order, 1966 vide Notification No. S.O. 3663(E)/Ess.Com./Sugarcane dated 26.07.2018. As per information available in this Department, M/s Shree Tatyasaheb Kore Warana Sahakari Sakhar Karkhana Limited, Maharashtra and M/s Shree Renuka Sugars Limited, Athani, Karnataka are producing ethanol directly from sugarcane juice.

Under the Scheme for Extending Financial Assistance to Sugar Mills for Enhancement & Augmentation of Ethanol Production Capacity, 114 proposals for enhancement/augmentation of ethanol production capacity have been accorded in-principle approval for availing loan from banks amounting to Rs. 6139.08 Crore for which interest subvention of Rs. 1332 Crore shall be borne by the Government. Besides, the Government has also notified remunerative price @ Rs. 43.46/litre for supply of ethanol produced from C-Heavy molasses under EBP. Separately, remunerative prices for ethanol produced from B-Heavy molasses and sugarcane juice have also been fixed @ Rs. 52.43/litre and Rs. 59.13/litre respectively.

12-Sep-2018: Cabinet approves on Fixation/Revision of ethanol price derived from B heavy molasses / partial sugarcane juice and 100% sugarcane juice under Ethanol Blended Petrol Programme for Ethanol Supply Year 2018-19

The Cabinet Committee on Economic Affairs has given its approval to revise / fix the price of ethanol derived from B heavy molasses / partial sugarcane juice and fix a higher price for 100% sugarcane juice based ethanol for the forthcoming sugar season 2018-19 during ethanol supply year from 1st December 2018 to 30th November 2019 as under:

1. To fix the ex-mill price of ethanol derived out of B heavy molasses / partial sugarcane juice to Rs.52.43 per litre (from prevailing price of Rs.47.13 per litre).
2. To fix the ex-mill price of ethanol derived from 100% sugarcane juice at Rs.59.13 per litre (from prevailing price of Rs.47.13 per litre) for those mills who will divert 100% sugarcane juice for production of ethanol thereby not producing any sugar.
3. Additionally, GST and transportation charges will also be payable. OMCs have been advised to fix realistic transportation charges so that long distance transportation of ethanol is not disincentivized.
4. OMCs are advised to prioritise ethanol from 1) 100 % sugarcane juice, 2) B heavy molasses / partial sugarcane juice, 3) C heavy molasses and 4) Damaged Food grains/other sources, in that order.

Impact: The decision will serve multiple purposes of reducing excess sugar in the country, increasing liquidity with the sugar mills for settling cane farmer's dues and making higher ethanol available for Ethanol Blended Petrol (EBP) Programme.

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. Remunerative price to ethanol suppliers will help in reduction of cane farmer's arrears, in the process contributing to minimizing difficulty of sugarcane farmers.

Ethanol availability for EBP Programme is expected to increase significantly due to higher price being offered for procurement of ethanol from B heavy molasses / partial sugarcane juice and 100% sugarcane juice for first time.

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

Background: Ethanol Blended Petrol Programme was launched by the Government in 2003 on pilot basis which has been subsequently extended to the Notified 21 States and 4 Union-Territories 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.

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.

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

With a view to limit sugar production in the Country, Government has taken multiple steps including, allowing diversion of B heavy molasses / sugarcane juice for production of ethanol. As the ex-mill price of sugar has increased from the earlier estimated price, there is a need to revise price of B heavy molasses / partial sugarcane juice and 100% sugarcane juice for production of ethanol.

It is worth noting that as compared to ethanol derived from C heavy molasses route, diversion of B heavy molasses reduces the sugar by about 20% and increases ethanol availability by about 100%. On the other hand, diversion of sugarcane juice reduces sugar by 100% and increases ethanol availability by about 600%.

3-Sep-2018: Cabinet approves Mechanism revision of ethanol price for supply to Public Sector Oil Marketing Companies for procurement of ethanol w.e.f. December’19 for one year period

The Cabinet Committee on Economic Affairs has given its approval for the following, including fixing higher ethanol price derived from different raw materials under the EBP Programme for the forthcoming sugar season 2019-20 during ethanol supply year from 1st December 2019 to 30th November 2020:

1. The price of ethanol from C heavy molasses route be increased from Rs.43.46 per lit to Rs.43.75 per litre,
2. The price of ethanol from B heavy molasses route be increased from Rs.52.43 per lit to Rs.54.27 per litre,
3. The price of ethanol from sugarcane juice/sugar/sugar syrup route be fixed at Rs.59.48 per litre,
4. Additionally, GST and transportation charges will also be payable. OMCs have been advised to fix realistic transportation charges so that long distance transportation of ethanol is not disincentivized,
5. OMCs are advised to continue according priority of ethanol from 1) sugarcane juice/sugar/sugar syrup, 2) B heavy molasses 3) C heavy molasses and 4) Damaged Food grains/other sources, in that order.

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. Remunerative price to ethanol suppliers will help in reduction of cane farmer’s arrears, in the process contributing to minimizing difficulty of sugarcane farmers.

Ethanol availability for EBP Programme is expected to increase significantly due to higher price being offered for procurement of ethanol from all the sugarcane based routes, subsuming “partial sugarcane juice route” and “100% sugarcane juice route” under “sugarcane juice route” and for the first time allowing sugar and sugar syrup for ethanol production. Increased ethanol blending in petrol has many benefits including reduction in import dependency, support to agricultural sector, more environmental friendly fuel, lesser pollution and additional income to farmers.

Background: Government has been implementing Ethanol Blended Petrol (EBP) Programme wherein OMCs sell petrol blended with ethanol up to 10%. This programme has been extended to whole of India except Union Territories of Andaman Nicobar and Lakshadweep islands with effect from 01st April, 2019 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.

Government has notified administered price of ethanol since 2014. For the first time during 2018, differential price of ethanol based on raw material utilized for ethanol production was announced by the Government. These decisions have significantly improved the supply of ethanol thereby ethanol procurement by Public Sector OMCs has increased from 38 crore litre in ethanol supply year 2013-14 to estimated over 200 crore litre in 2018-19.

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

With a view to limit sugar production in the Country and to increase domestic production of ethanol, Government has taken multiple steps including, allowing diversion of B heavy molasses and sugarcane juice for ethanol production. As the ex-mill price of sugar and conversion cost have undergone changes, there is a need to revise the ex-mill price of ethanol derived from different sugarcane based raw materials. There is also a demand from the industry to include sugar and sugar syrup for ethanol production to help in solving the problem of inventory and liquidity with the sugar mills.

27-Jun-2018: Cabinet approves Mechanism for procurement of ethanol by Public Sector Oil Marketing Companies (OMCs) to carry out the Ethanol Blended Petrol (EBP) Programme

The Cabinet Committee on Economic Affairs has approved the Mechanism for procurement of ethanol by Public Sector Oil Marketing Companies (OMCs) to carry out the Ethanol Blended Petrol (EBP) Programme - Revision of ethanol price for supply to Public Sector OMCs.

Now, CCEA has approved the following for the forthcoming sugar season 2018-19 during ethanol supply period from 1st December 2018 to 30th November 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 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 MoPNG as per actual Fair & Remunerative Price (FRP) declared by the Government.

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

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. Remunerative price to ethanol suppliers will help in reduction of cane farmer's arrears, in the process contributing to minimizing difficulty of sugarcane farmers.

Ethanol availability for EBP Programme is expected to increase significantly due to higher price for C heavy molasses based ethanol and enabling procurement of ethanol from B heavy molasses and sugarcane juice for first time. Increased ethanol blending in petrol has many benefits including reduction in import dependency, support to agricultural sector, more environmental friendly fuel, lesser pollution and additional income to farmers.

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.

The sugarcane and sugar production in this sugar season is very high leading to   dampening   of sugar prices.   Consequently, sugarcane farmers’ dues have increased due to lower capability of sugar industry to pay the farmers. Government has taken many decisions for reduction of farmer's dues.         

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 sugar industry to pay farmers dues and increase 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.

Background: Ethanol Blended Petrol (EBP) Programme was launched by the Government in 2003 on pilot basis which has been subsequently extended to the Notified 21 States and 4 Union Territories to promote the use of alternative and environmental friendly fuels. This intervention also seeks to reduce import dependency for energy requirements and give boost to agriculture sector.