NEW DELHI: The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved a mechanism for procurement of ethanol by Oil Marketing Companies (OMCs) and increased ex-mill price for ethanol derived out of C-heavy molasses.
The price of ethanol produced from C-molasses is hiked by Rs 2.85 per litre to Rs 43.70 for the new season beginning December 2018. Also, the Cabinet has fixed ex-mill price of Rs 47.49 per litre for ethanol derived from B-heavy molasses. Additionally, GST and transportation charges will also be payable on both the products.
The new reform to boost ethanol production and supply of ethanol is seen as a measure to cut India’s oil import dependence as well as give higher price for sugarcane. “Increased ethanol blending in petrol has many benefits including reduction in import dependency, support to agricultural sector, more environment-friendly fuel, lesser pollution and additional income to farmers,” the government said in a statement.
Finance Minister Piyush Goyal said the government is keen to move forward to 10 per cent blending of ethanol with petrol, which will help reduce India’s fuel import bill and help sugar industry as well as cane growers. Only 4 per cent of ethanol is blended with petrol now.
The sugar industry, which this year has seen a bumper production of crop, is struggling to get a good return, and expects to benefit from the new move. Mills are expecting revenue realisation of over Rs 5,000 crore from sale of ethanol to OMCs during the sugar season this year (2017-18)(October-September). The prices have been fixed based on estimated fair and remuneration price (FRP) for the 2018-19 sugar season and will be modified by the oil ministry as per the actual FRP.