India Raises Ethanol Purchase Prices For State-Run Fuel Retailers

Indian government has fixed a price of up to 65.61 rupees for purchase of ethanol from sugar mills as the nation wants to boost blending with gasoline, oil minister Hardeep Singh Puri said on Wednesday.

India, the world's third biggest oil importer and consumer, has expedited efforts to double ethanol blending with gasoline to 20% from the current over  10% across the country from 2025/26.    

Puri said 20% ethanol blended fuel will be sold in parts of country from April next year.

Prime Minister Narendra Modi has pledged to achieve net-zero carbon emissions by 2070, and is encouraging industries to switch to cleaner options to cut carbon footprint.

The government fixes ethanol purchase prices for fuel retailers Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp  every marketing year from December, reflecting a change in floor price of sugar.

India recently raised the floor price that sugar mills must pay for cane in the season beginning Oct. 1 to 305 rupees per 100 kg, from 290 rupees a year earlier.

Indian fuel retailers have floated tenders seeking to buy 5.4 billion litres of gasoline for blending in 11 months from December compared to 4.40 billion litres sought for this year, to meet blending needs as the nation's gasoline consumption is rising.  

From next year, the ethanol procurement year would start from November, Puri added.

The new rates for ethanol derived from "C" heavy molasses will rise to 49.41 rupees per litre from 46.66 earlier. Rates for "B" heavy molasses will increase to 60.73 rupees from 59.08, and those derived from sugarcane juice/sugar/sugar syrup to 65.61 rupees from 63.45, the government said in a statement.

The B-heavy molasses juice has some sucrose content left in them for sugar production, whereas C-heavy molasses is a cane by-product that has no sugar content left in it.

"All distilleries will be able to take benefit of the scheme and a large number of them are expected to supply ethanol for the ethanol blended petrol programme," the Cabinet Committee on Economic Affairs said.