Centre may raise ethanol procurement by Rs 2.5-3 per litre for 2020-21

The Cabinet Committee on Economic Affairs (CCEA) is expected to decide on the same soon, say sources

To encourage more sugar mills to divert sugarcane for producing ethanol rather than sugar, the Centre is all set to increase the procurement price of all three categories of ethanol produced from different sources by between Rs 2.50-3.0 per litre for the 2020-21 season.

Sources said the Cabinet Committee on Economic Affairs (CCEA) is expected to decide on the same soon.

At present ethanol production is allowed from C-heavy molasses, B-heavy molasses, sugarcane juice or syrup or direct sugar. It is also allowed to be made from broken unused grains. The price hike recommendation is for ethanol derived from sugarcane.

The ethanol procurement season by Oil Marketing Companies (OMCs) will run from December 1 2020 to November 30, 2021.

For the 2019-20 season that will end in a few weeks, sugar mills have so far contracted around 1.95 billion litres of ethanol of which 1.42 billion litres (around 73%) has already been supplied to the Oil Marketing Companies (OMCs). This accounts for around 5.1 per cent ethanol blending, while the government has targeted to blend around 10 per cent ethanol with petrol by the year 2022.

The sugar mills have an installed ethanol production capacity of around 3.55 billion litres which is expected to rise to around 4.66 billion litres in the next few years, thus enabling the mills to produce more ethanol.

For the 2019-20 sugar season the government had fixed a target of producing 2.60 billion litres of ethanol, up from 2.00 billion litres produced during the previous sugar season. However, actual production was around 1.95 billion litres due to low cane availability.

For 10 per cent ethanol blending in the current 2019-20 season, the OMCs had placed a requirement of 5.11 billion litres of ethanol from all sources (that also includes broken grains), of which actual contracted out from sugarcane sources is around 1.95 billion litres.

For the 2020-21 procurement season, OMCs have placed an initial requirement of 4.65 billion litres of ethanol for meeting the 10 per cent blending target.

In the current ethanol marketing year (2019-20), the Central government had raised the procurement price of ethanol derived from C heavy molasses from Rs 43.46 a litre to Rs 43.75 per litre, and that from B heavy molasses to Rs 54.27 per litre from Rs 52.43 earlier.

Also, the price of ethanol from sugarcane juice, sugar, sugar syrup route has been fixed at Rs 59.48 per litre, up from Rs 59.19 a litres. This price is now expected to be increased by another Rs 2.5-3 per litre for the coming season to encourage more diversion.

That apart, OMCs have been entrusted to purchase ethanol produced from broken and damaged grains at a mutually agreeable price.

Ethanol Procurement Price For 2019-20 Season That Started From December 1. In Rs/ litre

Ethanol	Price for 2019-20 season
From B-heavy Molasses	43.75
From C-Heavy Molasses	54.27
From Sugarcane juice/syrup/sugar	59.48

Source: Press Information Bureau (PIB)