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Ethanol Blending News: In recent developments, the Centre’s ethanol blending scheme has encountered a shift due to low sugar stocks and uncertainties in production. The Modi government, aiming to balance domestic needs, has taken measures to curtail the diversion of sugar for ethanol production. This move is expected to impact the successful ethanol blending program, prompting a closer look at the dynamics governing this decision.
The Success of Ethanol Blending Program
Ethanol, a highly pure form of alcohol, serves as a key component in the ethanol blended petrol (EBP) program. This initiative, under the Narendra Modi government, has witnessed significant success, with the all-India average blending of ethanol with petrol increasing from 1.6% in 2013-14 to an impressive 11.8% in 2022-23.
Ethanol Blending Program: Feedstock Diversification
A pivotal factor contributing to the success of the ethanol blending program is the diversification of feedstock. Traditionally, ethanol is produced from C-heavy molasses, a byproduct of sugarcane processing. However, innovative approaches involve using alternative feedstocks such as B-heavy molasses, sugarcane juice/syrup, surplus rice, broken/damaged food grains, and maize.
Incentives for Feedstock Diversification
The Modi government has played a significant role in incentivizing mills to diversify their feedstocks for ethanol production. The pricing structure for ethanol from different feedstocks reflects this incentive. While the ex-distillery price for ethanol from C-heavy molasses is set at Rs 49.41 per litre, ethanol from B-heavy molasses, sugarcane juice/syrup, surplus FCI rice, broken/damaged grain, and maize commands higher prices ranging from Rs 55.54 to Rs 65.61 per litre.
Ethanol Blending News: Setback for Industry
Ethanol Blending News on December 7: The directive poses a setback for companies that have invested in capacities to produce ethanol directly from cane juice/syrup. Key players, including Balrampur Chini Mills, Shree Renuka Sugars, Ugar Sugar Works, and Nirani Sugars, are likely to face challenges due to this directive. The impact is particularly evident in the context of the ongoing ethanol supply tender floated by oil marketing companies (OMCs) for the year 2023-24.
Ethanol Blending In India: Stats & Challenges
The decision to slow down ethanol blending is closely linked to the challenges in sugar supply. The 2022-23 sugar year concluded with stocks of just over 57 lakh tonnes, the lowest in six years. Additionally, uncertainties in the production outlook for the ongoing 2023-24 year add to the concerns.
Ethanol Blending Target in India
The Indian government has pledged to meet a 20% ethanol blending target by 2025-26, despite a temporary ban on sugarcane juice and sugar syrup due to uncertainty about cane output. The government plans to promote ethanol production through feedstock such as B and C-heavy molasses, damaged rice, and maize.
Maharashtra Ethanol Concern
The National Federation of Cooperative Sugar Factories projects a decline in sugar output, particularly in Maharashtra and Karnataka, due to inadequate rainfall and low reservoir water levels.
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Balancing Domestic Supply: A Government Priority
The recent directive aligns with the government’s emphasis on prioritizing domestic supply over exports, consumers over producers, and food over fuel. The ban on sugar shipments since May 2023 further underscores this commitment to securing domestic needs. The government’s stance reflects a conscious effort to maintain stability and balance in the sugar and ethanol sectors.
Ethanol Blending: Navigating the Path Ahead
As the Centre navigates the complexities of the ethanol blending scheme, the dynamics between sugar production, ethanol blending, and feedstock diversification come into focus. The government’s directive to restrict sugarcane juice/syrup for ethanol production signals a strategic move to balance the scales in favor of domestic needs. The industry, particularly companies relying on direct cane juice/syrup conversion, faces challenges, emphasizing the need for adaptability and resilience in this evolving landscape. Balancing food and fuel priorities remains at the core of the government’s decision-making process, shaping the trajectory of the ethanol blending program in the coming years.
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