Centre Approves Revised Ethanol Price to Cut Oil Imports and Boost Renewables
By CCN News | Published: Jan 31, 2025
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The Cabinet Committee on Economic Affairs (CCEA) approved a revision in the ethanol procurement price for Public Sector Oil Marketing Companies (OMCs) under the Ethanol Blended Petrol (EBP) Programme this week. The ex-mill price of ethanol derived from C Heavy Molasses (CHM) will increase from Rs. 56.58 per litre to Rs. 57.97 per litre for the Ethanol Supply Year (ESY) 2024-25, which runs through October 31, 2025. The price revision is part of the government's ongoing effort to support ethanol suppliers and strengthen the EBP Programme, aimed at promoting renewable energy and reducing dependency on crude oil imports.
The revision ensures price stability and guarantees remunerative returns for ethanol producers, while also addressing the rising demand for ethanol to meet blending targets. The government has noted that the increase in ethanol prices will help meet the program’s higher blending target and provide sufficient ethanol availability for the upcoming ethanol supply year.
Progress of Ethanol Blending Programme
The EBP Programme has been a cornerstone of India’s strategy to promote the use of alternative, environmentally friendly fuels. This initiative encourages blending up to 20% ethanol with petrol to reduce the country’s reliance on imported crude oil and to boost the agriculture sector, particularly benefiting sugarcane farmers.
Since its launch, the blending of ethanol in petrol has seen significant progress. In the Ethanol Supply Year 2013-14, 38 crore litres of ethanol were blended into petrol, but by the 2023-24 period, that number surged to 707 crore litres, achieving an average ethanol blend of 14.6%. These efforts have led to substantial economic benefits, including savings of over Rs. 1,13,007 crore in foreign exchange and a crude oil substitution of approximately 193 lakh metric tonnes.
The Indian government has also advanced its ethanol blending target from 2030 to 2025-26, with a roadmap in place to reach 20% ethanol blending by that year. For the current ethanol supply year, the target is 18% blending.
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Support for Ethanol Industry and Infrastructure Development
The price revision is part of a broader set of measures to enhance ethanol production capacity in India. These include the expansion of distillation capacity to 1713 crore litres per annum, the establishment of Long Term Off-take Agreements (LTOAs) for ethanol production in deficit regions, and the promotion of multi-feed distilleries. Other initiatives include the availability of E-100 and E-20 fuels, as well as the introduction of flex-fuel vehicles.
As a result of the government's efforts under the EBP Programme, there has been a marked increase in investments in greenfield and brownfield distilleries, storage, and logistics infrastructure across the country. This has also led to job creation and value-sharing among various stakeholders in the ethanol supply chain.
The price revision for the 2024-25 period aims to ensure continued success in these efforts, with ethanol suppliers benefiting from early payments and a secure market, all contributing to the broader goals of energy independence, foreign exchange savings, and environmental sustainability.
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