With India achieving 15 percent ethanol blending in petrol for the first time recently, industry players and experts point out that supply chain infrastructure for ethanol storage may be a roadblock to achieve higher blending targets.
According to the oil ministry data, India reached blending of ethanol in petrol to the extent of 15.4 percent in the month of May, compared to 12.7 percent in the previous month. The 15 percent ethanol blending holds importance as the government aims to reach 20 percent blending in petrol by 2025.
“We will need extra push to achieve the 20 percent target- especially on the infrastructure side. We already have the policy push. Infrastructure not only means logistics but also the storage of ethanol. We have limited storage and need to enhance the storage capacity. The buffer capacity needs to be taken care of. We have enough supply and demand (of ethanol); the work needs to be done at the infrastructure side to consume ethanol. The work is ongoing at OMCs,” said Gaurav Kedia, Chairman of the Indian Biogas Association.
Some ethanol producers had recently flagged concerns regarding surplus of ethanol due to limited offtake by the oil marketing companies (OMCs), highlighting mismatch in demand and supply in the market. Industry players, however, say that the ethanol surplus has now been taken care of and that the government is working towards improving storage infrastructure.
“The growth of the ethanol sector has been very rapid. On an average, the industry has grown almost 15-16 percent on an average year-on-year. In a growth like this, the infrastructure for storage and handling of ethanol is yet to be developed. The government is in discussion for creating ethanol terminals and depots. There is stress today for larger quantity of storage,” said Vijay Nirani, Managing Director of TruAlt Bioenergy.
TruAlt Bioenergy is an ethanol producer based out of Bengaluru with a capacity of 2 million litres per day.
“To ensure supply for the entire year, the government is inviting private companies like us to take inputs to create ethanol storage depots. There are invitations to do it on a PPP (public private partnerships) model so that supply and demand of ethanol is rationalised for the entire year,” added Nirani.
The ethanol industry faced an unforeseeable challenge in late 2023 when the government banned the use of sugarcane for production of ethanol. The decision was later reversed but it has triggered concerns over potential disruption in future due to such changes in policy.
On December 7, the central government notified sugar mills to not use sugarcane juice for ethanol production in ESY (ethanol supply year) 2023-2024, which begins in November. The decision to curb the use of sugarcane for ethanol production was taken amid high prices of sugar. However, later on December 16, the Food Ministry issued a fresh order reversing the ban on the use of sugarcane juice for ethanol production after the sugar mills operators opposed the move.
“It was a blunder to not allow use of sugarcane for ethanol production. Because of the temporary ban, there was even a pile up of sugar stock in the country. It was an unnecessary ban on ethanol which created stress in offtake. The OMCs required ethanol and the producers had surplus ethanol, but the linkage got disturbed because of the temporary policy blunder,” said Nirani.
Achieving 20 percent ethanol blending target would have become difficult for the government if the ban would not have been lifted. To avoid similar issues, Minister of Petroleum and Natural Gas Hardeep Singh Puri has on several occasions said that the government is working to increase ethanol production by broken rice, maize and waste.
“Ethanol from other commodities such as rice and corn is also getting popular. If that becomes viable, then you will have ethanol made from other sources and sugarcane. In that scenario, pricing will play a key role and OMCs would be able to blend in higher proportions,” said Ashvin Patel, Founder of Biofuels Junction.
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