Govt mulls ethanol price hike for 2024-25 season to incentivise production, meet blending goals

Last week, cooperation minister Amit Shah called for a multi-dimensional approach to biofuel manufacturing and affirmed that India would achieve its 20 per cent ethanol blending target by 2025-26, ahead of the original 2030 deadline.

In an effort to achieve the 20 percent blending target by 2025-26, the Centre is mulling a revision in ethanol prices for the upcoming season starting November 2024 to incentivise production, PTI reported citing top sources in the government.

Through the proposal, the government could also push for diversification of feedstocks.

A committee headed by a joint secretary from the petroleum ministry has already held one round of discussions on the proposal. The revision of ethanol prices will be based on the fair and remunerative price of sugarcane, they added.

"The price revision is being considered on priority to incentivise production and meet our blending goals," a source said, requesting anonymity.

Following the report, most sugar and ethanol stocks reported gains in the markets.

Balrampur Chini Mills, a sugar and ethanol manufacturer, posted big gains as it was trading 5.19 percent higher at Rs 520.85 on NSE at 13:57 pm. Another manufacturer, Shree Renuka Sugars was trading 3.79 percent higher at Rs 47.91 on NSE, while Praj Industries gained 2.69 percent to trade at Rs 725.8.

Last week, cooperation minister Amit Shah called for a multi-dimensional approach to biofuel manufacturing and affirmed that India would achieve its 20 per cent ethanol blending target by 2025-26, ahead of the original 2030 deadline.

Ethanol prices, fixed by the government, have remained unchanged since the 2022-23 season (November-October). Currently, ethanol produced from cane juice is priced at Rs 65.61 per litre, while rates for ethanol from B-Heavy and C-Heavy molasses stood at Rs 60.73 and Rs 56.28 per litre, respectively.

The government sees the ethanol blending program as a key to meeting its green energy commitments and improving the financial health of sugar mills, the sources added.

As per official data, ethanol blending in India has reached 13.3 percent by July of the current season, up from 12.6 per cent during the 2022-23 season.

The country's total ethanol production capacity currently stands at 1,589 crore litres, oil marketing companies purchased 505 crore litres of ethanol for blending purposes during 2023-24 season.

Sources said the committee is specifically looking into the revision of prices of ethanol produced from sugarcane.

The sugar industry has demanded ethanol price hike, an increase in the minimum selling price of sugar, and permission for sugar exports.

However, the government is prioritizing ethanol production and blending targets.

The ministries of petroleum and sugar did not respond to queries on the potential price revision.

With PTI inputs