Cabinet approves 3% hike in ethanol procurement prices, targets 18% blending in 2024-25

The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, on Wednesday approved the revision of ethanol procurement prices for public sector Oil Marketing Companies (OMCs) for the Ethanol Supply Year (ESY) 2024-25 under the Ethanol Blended Petrol (EBP) Programme.

"We all know that ethanol production has significantly benefited the country’s economy. It has been advantageous for farmers, saves foreign exchange, and supports environmental sustainability. In the last Ethanol Supply Year (ESY) ending in October, ethanol contributed Rs 40,000 crore in benefits," Information and Broadcasting Minister Ashwini Vaishnaw said at a Cabinet briefing.

"Today, the Cabinet has approved the procurement price for three key components derived from sugarcane—C-heavy molasses, B-heavy molasses, and sugarcane juice/sugar/sugar syrup," he added.

The administered ex-mill price of ethanol derived from C Heavy Molasses (CHM) has been fixed at ₹57.97 per litre for ESY 2024-25 (from November 1, 2024, to October 31, 2025.), up from ₹56.58 per litre. As in the past, the GST and transportation charges would be separately payable.

The 3% increase in CHM ethanol prices is expected to ensure adequate ethanol availability to meet the government’s increased blending targets.

"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," a statement read.

The EBP Programme, implemented across the country, mandates OMCs to blend ethanol with petrol up to 20%. The initiative promotes alternative and eco-friendly fuels, reduces import dependence, and boosts the agriculture sector.

Over the last decade, ethanol blending by OMCs has resulted in foreign exchange savings of over ₹1,13,007 crore and crude oil substitution of approximately 193 lakh metric tonnes, according to the government.

Ethanol procurement by OMCs has risen from 38 crore litres in ESY 2013-14 to 707 crore litres in ESY 2023-24, achieving an average blending rate of 14.60%, a release said.

The government has advanced its 20% ethanol blending target from 2030 to ESY 2025-26 and has put in place a “Roadmap for Ethanol Blending in India 2020-25.” For ESY 2024-25, OMCs aim to achieve 18% blending.

"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," the release added.