Ethanol blending with petrol to double at 8% in 2018-19 sugar year: Oil Ministry

Ethanol blending with petrol is likely to double to 8% in the current season as a better price is being offered by oil marketing companies (OMCs), according to Oil Minister, Mr. Dharmendra Pradhan. The minister also assured additional soft loans to mills for expanding ethanol capacity.

Addressing the 84th Annual General Meeting of Indian Sugar Manufacturers’ Association (ISMA), he said the government has taken a number of steps in the last four years to bring a “paradigm shift” in the Rs. 1 lakh-crore sector. “Blending of ethanol with petrol has reached 4% from 1-1.5% in the last four years. In 2018-19 sugar year (October-September), the blending level will reach 7-8%,” Mr. Pradhan said.

ISMA President, Mr. Gaurav Goel agreed that the ethanol blending level will reach 8% in 2018-19 as orders for 260-crore litres of ethanol have been received from OMCs. For 10% blending, there is a requirement of 330-crore litres of ethanol. Mr. Goel was confident the blending level would reach 10% by 2020 and 20% by 2022.

Although buying ethanol is costly for OMCs because of hike in procurement price, the government has taken a holistic view to boost ethanol production for farmers welfare as well as to meet the nation’s energy requirements.

Government initiatives

The minister said the government spends Rs. 8-10 lakh-crore of foreign exchange to meet energy demand by importing crude oil, LNG and other products. He said the government has provided soft loans to the first group of applications for creating ethanol capacity and is committed to sanctioning loans for the second group.

In June, the government approved soft loans of Rs. 4,440-crore for building ethanol capacity to absorb excess cane output. It will bear interest subvention of Rs. 1,332-crore over a period of five years, including moratorium period of one year. According to industry experts, the government may provide an interest subsidy of about Rs. 1,800-crore in the second round and may also allow standalone molasses-based distilleries to participate in this soft loan programme. Later in September, the government approved an over 25% hike in the price of ethanol produced directly from sugarcane juice in a bid to cut surplus sugar production and reduce oil imports.

The volume of ethanol procured by OMCs has increased from 38-crore litres in sugar year 2013-14 to 150-crore litres in 2017-18.