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OMCs Boost Ethanol Production with ₹6.87/Litre Incentive on C-Heavy Molasses

Milestone Decision to Promote Cleaner Fuels Aligns with Government's EBP Program Targets

In a significant move, Oil Marketing Companies (OMCs) have declared an incentive of ₹6.87 per liter for ethanol produced from C-Heavy Molasses. According to reports, this incentive is aimed at boosting the production of ethanol from C-Heavy Molasses. With this announcement, the price of ethanol derived from C-Heavy Molasses will increase from ₹49.41 to ₹56.28 per liter.

This proclamation brings substantial relief to ethanol producers. It’s worth noting that OMCs recently issued a modified allocation for symbolic amendments to ethanol based on Sugarcane Juice (SCJ) and B-Heavy Molasses (BHM). As per the orders from the Department of Food and Public Distribution (DFPD) on December 15, 2023, OMCs were directed to allocate each distillery with modified allocation and contracts for the supply of SCJ and BHM-based ethanol, amounting to approximately 1.7 million tons of sugarcane diversion.

In October 2023, OMCs had released a tender for 825 crore liters of ethanol for the Ethanol Blended Petrol (EBP) program for the fiscal year 2023-24. This included an allocation of 265 crore liters from sugarcane-based feedstock, with 135 crore liters from SCJ and 130 crore liters from BHM. Experts suggest that approximately 157 crore liters have been reallocated, including around 42 crore liters from SCJ and 115 crore liters from BHM. (This translates to about 10 lakh tons for BHM and 7 lakh tons for SCJ sugarcane diversion).

As of November 30, 2023, the ethanol production capacity in the country is approximately 1380 crore liters, with around 875 crore liters based on molasses and approximately 505 crore liters based on grains. The Indian government has been implementing the Ethanol Blended Petrol (EBP) program nationwide, wherein OMCs sell petrol mixed with ethanol. Under the EBP program, the government has set a target of 20% ethanol blending in petrol by 2025.

To achieve the 20% blending target by 2025, an estimated 1016 crore liters of ethanol will be required, with a total demand for ethanol, including other uses, being 1350 crore liters. Considering that the plants operate at 80% efficiency, an ethanol production capacity of approximately 1700 crore liters will be needed by 2025.

This move by OMCs to incentivize ethanol production from C-Heavy Molasses aligns with the government’s efforts to promote cleaner fuels and achieve the ethanol blending targets set for the EBP program.

Source : CNBCTV

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