The government has decided to bring forward the deadline for achieving the 20 per cent ethanol blending target by a further two years to 2023, helping the nation save more forex on the oil import front as well as push for a greener future.
In a gazette notification issued on Wednesday, the Ministry of Petroleum and Natural Gas directed oil marketing companies to sell ‘Ethanol Blended Petrol” with percentage of ethanol up to 20 per cent, with effect from April 1, 2023. Earlier, it had advanced the deadline from 2030 to 2025.
The latest directive comes a couple of days after the government decided to expand the scope of the Sugarcane Control Order (SCO), 1966, to include standalone ethanol making plants under its ambit. With this, ethanol production will no longer be an ancillary activity of sugar production -- dedicated ethanol distilleries making ethanol from sugarcane directly can come up. Besides, they would be able to supply not just ethanol for blending, but also other alcohol products from chemical industrial applications as well as liquor making. The ethanol plants, however, would be bound to pay fair and remunerative prices for the sugarcane they procure from farmers.
The decision is significant because Uttar Pradesh, the largest sugarcane growing State, recently approved 54 new ethanol plants. In addition, plants that produce ethanol from damaged foodgrains received the nod from the Yogi Adityanath government a few days ago.
Ethanol requirement
According to experts, India would need 850 crore litres of ethanol and around 1,000 crore capacity to reach 20 per cent blending levels. Currently, India’s ethanol production capacity is around 425 crore litres, but only 325 crore litres is available for fuel blending, as a certain quantity is used for making rectified spirt (used in chemical industries) as well as extra neutral alcohol, for making liquor as well as sanitisers. With 325 crore litres, OMCs are expected to achieve 8.5 per cent blending. In the next ethanol year (which runs from November to October), the government is aiming to achieve a blending target of 10 per cent.
“Post the new ethanol blending programme announced in 2018, India’s ethanol production capacity has picked up significant pace. However, doubling procurement in one single year would be a difficult task and we believe achieving the 20 per cent target in 2023 would be distant from reality,” said Praful Vithalani, proprietor of Jagjivan Keshavji Co.
“However, with this directive, the government has made its intentions very clear and this will obviously add further fuel to the already hot ethanol story, Industry players will commit more capital and ultimately players will benefit from high ethanol profitability,” he said.
Vithalani, however, pointed out some risk factors. In case of a drought in any year, he said, the government may be compelled to give priority to sugar production first. This could impact standalone ethanol plants. Similarly, it has made it mandatory for OMCs to procure ethanol at higher prices, but this could be unviable in the long run, he said. Since sugar is a politically sensitive commodity, it may get priority over ethanol, particularly in election years, Vithalani said.
There is, however, no issue with Indian vehicles being able to use fuel blended with 20 per cent ethanol. The Society of Indian Automobile Manufacturers has already committed to the government that its members will release new vehicles with E20 material compatible from 2023.