NEW DELHI: The Cabinet Committee on Economic Affairs (CCEA) on Tuesday cleared a hike in ethanol procurement prices paid by oil marketing companies as part of the government’s ethanol blending programme (EBP), with the move seen providing some relief to the beleaguered sugar sector even as it helps the government reduce its oil import bills. The government has set a target of blending 10 per cent ethanol in petrol by 2022, from the current 6 per cent.
Procurement prices for ethanol produced from C-heavy molasses have been hiked by 0.29 per litre and ethanol from B-heavy molasses by `1.84 per litre. CCEA has also set the price for ethanol produced from sugarcane juice, sugar or sugar syrup to at `59.48 per litre. The new prices will go into effect from December 1, 2019.
The sugar industry welcomed the move. “The government’s decision to increase ethanol price once again, with special emphasis and a higher increase for ethanol made from B-heavy molasses, confirms the government’s commitment towards encouraging more diversion of the surplus sugarcane/sugar into ethanol,” Indian Sugar Mills Association’s (ISMA) DG Abinash Verma said.
The decision to allow a single premium price for ethanol produced from partial or 100 per cent sugarcane juice is another big and positive step in this direction, he added.
Analysts agree that this will help sugar mills gain some revenue by diverting cane to produce ethanol.
India’s sugar sector has been struggling to cope with consistently low sugar prices and a global glut in sugar supply, and the decision to hike ethanol prices could help sugar mills settle thousands of crores of cane arrears due to farmers ahead of two important state elections at the end of this year: Maharashtra and Haryana.
Oil import bill to fall by $1 billion: Briefing reporters, Dharmendra Pradhan, oil minister, said the higher price is expected to increase the procurement of ethanol under the EBP to 260 crore litres between December 2019 and November 2020, up from 200 crore litres the previous season.