Home >News >India >Centre raises ethanol prices for blending with petrol; farmers to benefit
Panel open to 1% agriculture cess on luxury products, in favour of cutting GST rate on ethanol from 18% to 12%.
Panel open to 1% agriculture cess on luxury products, in favour of cutting GST rate on ethanol from 18% to 12%.

Centre raises ethanol prices for blending with petrol; farmers to benefit

  • Price of ethanol from sugar has been increased to 62.25 per litre. Ethanol derived from C heavy molasses and B heavy molasses will be priced at 45.69 per litre and 57.61 per litre, respectively

NEW DELHI: The Cabinet Committee on Economic Affairs (CCEA) on Thursday revised ethanol procurement prices for state-run oil marketing companies (OMCs), including Indian Oil Corp. Ltd, Hindustan Petroleum Corp. Ltd, and Bharat Petroleum Corp. Ltd.

The CCEA chaired by Prime Minister Narendra Modi, raised prices of ethanol from sugar from 59.48 per litre to 62.25 per litre. Also, the price of ethanol derived from ‘C’ heavy and ‘B’ heavy molasses was increased by 1.94 and 3.34 per litre to Rs45.69 and Rs57.61 per litre, respectively.

These revised prices are for supply of ethanol to public sector OMCs for 2020-21 (1st December 2020 to 30th November 2021) and aimed at boosting farmers’ income. This comes in the backdrop of the government reaching out to financially weaker sections, migrant workers and farmers.

OMCs procured 195 crore litre of ethanol in 2019-20 ethanol supply year (ESY). This is a substantive increase from 38 crore litre procured in 2013-14 ESY.

Briefing reporters after the cabinet meeting, information and broadcasting minister Prakash Javadekar said GST and the transportation costs will be borne by the OMCs.

“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," the government said in a statement.

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

The aim is to blend up to 10% ethanol with petrol. Increased ethanol blending with fossil fuels will help reduce pollution and strengthen India’s resolve towards fulfilling commitments made at COP-21, the UN Climate Change Conference held in France in 2015.

It will also help lower India’s energy import dependency, helping the country save in crude oil import bills.

Javadekar added that ethanol is an environment friendly fuel and its blending is increasing every day. He said that blending is increasing because the government is giving good price for ethanol.

As part of the 20 trillion stimulus to revive a teetering economy, the government had earlier approved the increase in the minimum support prices (MSPs) of crops that is 50-83% higher than the cost of cultivation in an effort to put more money in the hands of farmers.

The national biofuels policy previously passed by the National Democratic Alliance (NDA) government will help India’s efforts to cut energy imports and carbon emissions. The NDA government has expanded the scope of raw material for ethanol production to include sugar cane juice, sugar beet, sweet sorghum and starch containing material such as corn, cassava, and damaged grain.

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