Government allows OMCs to sell ethanol as standalone fuel

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At a time when the petrol and diesel price hike is hurting the common man, the ministry of petroleum and natural gas has allowed the direct sale of ethanol as a standalone fuel for compatible automobiles.

Through a notification dated March 22, the government has amended the Motor Spirit and High-Speed Diesel Order 2005. The new notification will allow oil marketing companies -- Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation -- to sell bioethanol (E100).

“The Central Government permits the direct sale of bioethanol (E100) by an oil company for use as standalone fuel or blending with motor spirit, for compatible automobiles to all consumers, in accordance with the standards specified by the Bureau of Indian Standards,” the notification said. According to the notification, E100 or bioethanol means anhydrous alcohol recognised by BIS.

As per the National Policy on Biofuels -2018 under the Ethanol Blended Petrol (EBP) Programme, OMCs were given a target of blending 20 percent of ethanol in petrol by 2030. Though the companies had a mandate of blending it up to 10 percent, the programme was moving at a slow pace. In 2013-14, the percentage of ethanol-blended petrol was 1.53 percent, which increased to 5 percent in the ethanol supply year (ESY-December to November) 2019-20. This has further increased to 6.9 percent in 2020-21. For ESY 2020-21, the OMCs have allocated 325.5 crore litres of ethanol up to March 1 against a requirement of 457 crore litres for ESY 2020-21.

The new rule will be a huge boost for the sugar manufacturers in the country. Due to the push by the government on blending, the ethanol procurement by OMCs increased from 38 crore litres in ESY 2013-14 to 173.03 crore litre in ESY 2019-20. The major sources of ethanol in India include sugarcane Juice, B-Heavy Molasses, C-Heavy Molasses, damaged food grains or maize and surplus rice. It was in April 2020 that the government allowed the conversion of surplus rice, available with the Food Corporation of India (FCI), to ethanol.

In October 2020, the Cabinet Committee on Economic Affairs (CCEA) had raised the price of ethanol extracted from sugarcane juice to Rs 62.65 a litre from the current Rs 59.48 a litre. If used as a standalone fuel for compatible vehicles, it will be advantageous for consumers, who shift to such vehicles. The price of petrol in Delhi on March 25 was seen at Rs 90.78 a litre, while that of diesel was Rs 81.10 a litre.