NEW DELHI: To promote ethanol production from C-heavy molasses, a byproduct of sugar, oil marketing companies (OMCs) on Friday announced an incentive of `6.87/litre for ethanol makers. Oil companies such as Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) will now buy ethanol produced from C-heavy molasses at Rs 56.28 per litre as against Rs 49.41 per litre in the 2022-23.
OMCs are procuring ethanol to mix it with petrol as the government mandated the use of 20% ethanol blending in petrol in next two years. The purpose of the government is to discourage ethanol producers to use sugar juice, the high sugar feedstock and use C-heavy molasses — a very low sugar content.
“Ensuring farmers’ prosperity, saving precious foreign exchange and driving sustainability! Rs 6.87 per litre incentive for ethanol from C molasses by Public Sector OMCs bolsters green economy and also strengthens foundation for a cleaner and eco-friendly future with Ethanol blended petrol programme under the leadership of Prime Minister Narendra Modi,” said petroleum minister Hardeep Singh Puri.
In the first week of December 2023, the government restricts using of sugarcane juice and sugar syrup to produce ethanol in the country. It is believed that the decision to curb use of sugarcane for ethanol production comes as domestic prices of sugar have remained elevated, up about 5% in December this year compared with last year.
India, which imports 85% petroleum products, aims to cut down its imports by blending ethanol in petrol. Its initial target of 10% blending was achieved in mid 2022, much ahead of the timeline of November 2022. India aims to achieve 20% blending by 2025, ahead of its previous target of 2030.
As per the reports, in 2022-23 (Dec-Oct), about 4.94 billion litres of ethanol supplied to the OMCs. Out of it a quarter estimated to be about 1.26 billion litres came from sugarcane juice or syrup as feedstocks, while 2.33 billion litres (about 47%) came from B-heavy molasses, while the rest around 1.30 billion litres came from grain-based sources.
C-heavy molasses contributed 0.06 billion litres of the total quantity of ethanol supplied to the OMCs in 2022-23. Sugarcane and its by-products like B molasses are the major source of ethanol production in India. Other sources for producing ethanol are corn, rice, and barley.