Government Mulls Ethanol Price Hike With Blending Target In Focus

The government is considering a proposal to increase ethanol prices for the season starting November 2024, while also pushing for diversification of feedstocks, as it aims to achieve the 20% blending target by 2025-26, sources said.

A committee headed by a joint secretary from the petroleum ministry has already held one round of discussions on the proposal. The revision of ethanol prices will be based on the fair and remunerative price of sugarcane, they added.

"The price revision is being considered on priority to incentivize production and meet our blending goals," a source said, requesting anonymity.

Last week, Cooperation Minister Amit Shah called for a multi-dimensional approach to biofuel manufacturing and affirmed that India would achieve its 20% ethanol blending target by 2025-26, ahead of the original 2030 deadline.

Ethanol prices, fixed by the government, have remained unchanged since the 2022-23 season (November-October). Currently, ethanol produced from cane juice is priced at Rs 65.61 per litre, while rates for ethanol from B-Heavy and C-Heavy molasses stood at Rs 60.73 and Rs 56.28 per litre, respectively.

The government sees the ethanol blending program as a key to meeting its green energy commitments and improving the financial health of sugar mills, the sources added.

As per official data, ethanol blending in India has reached 13.3% by July of the current season, up from 12.6% during the 2022-23 season.

The country's total ethanol production capacity currently stands at 1,589 crore litres, oil marketing companies purchased 505 crore litres of ethanol for blending purposes during 2023-24 season.

Sources said the committee is specifically looking into the revision of prices of ethanol produced from sugarcane.

The sugar industry has demanded ethanol price hike, an increase in the minimum selling price of sugar, and permission for sugar exports.

However, the government is prioritising ethanol production and blending targets.

The ministries of petroleum and sugar did not respond to queries on the potential price revision.