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HomeEconomyModi govt's ethanol blending plan aims to get Rs 41,000 cr investment,...

Modi govt’s ethanol blending plan aims to get Rs 41,000 cr investment, lower oil import bill

When ethanol — which is made from molasses, grains, etc — is mixed into petrol, it results in a fuel that is believed to be as efficient but less harmful to the environment.

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New Delhi: The central government is expecting investments of up to Rs 41,000 crore to help India achieve its ethanol blending target of 10 per cent by 2022 and 20 per cent by 2025. 

This investment is likely to arrive as capacity addition for ethanol-producing distilleries in addition to building new ones, Union Food Secretary Sudhanshu Pandey said Tuesday as he addressed a press conference regarding the progress of the government’s Ethanol Blending Programme (EBP), and the road map for it. 

When ethanol — which is made from molasses, grains, etc — is mixed into petrol, it results in a fuel that is believed to be as efficient but less deleterious to the environment.

Ethanol blending in petrol is a critical part of the Modi government’s plans to cut India’s oil import bill and shrink its carbon footprint in pursuit of its battle against climate change. 

Earlier this month, Prime Minister Narendra Modi advanced India’s targeted transition to 20 per cent ethanol blending by five years, to 2025 from 2030, with an aim to begin the rollout of this fuel — “E20” — by 2023.

At the press conference, Pandey detailed the government’s plans to set aside surplus food products like sugarcane towards the goal of increasing ethanol production, while also highlighting how it  will usher in new employment opportunities, primarily in rural areas, besides strengthening the agricultural economy.

“EBP will a bring positive impact on the country’s economy, along with promoting ethanol as an indigenous non-polluting and virtually inexhaustible fuel. This reduces carbon monoxide emission by 30-50 per cent and hydrocarbon by 20 per cent,” he said.

“The production of fuel-grade ethanol and its supply to oil companies has increased by 5 times from 2013-14 to 2018-19. In 2018-19, ethanol production touched 189 crore litres, thereby achieving 5 per cent blending. The ethanol supply in the current year 2020-21 is more than 300 crore litres, contributing 8-8.5 per cent blending levels. We would be achieving a 10 per cent blending target by 2022,” he added. 

So far, India has drawn EBP-related investment to the tune of Rs 7,000 crore, he said, adding that India has plans to boost ethanol production by 1,600 crore litres in the coming times.

Also Read: Bihar wants its alcohol put to better use as state looks to become ethanol hub 

Will help sugar mills clear dues

Pandey said the government plans to divert excess sugar and grain harvests to boost ethanol production. 

In the upcoming sugar season (2021-22), it is estimated that about 35 lakh metric tonnes (LMT) of sugar will be diverted for EBP, with an aim to raise this to 60 LMT by 2025, Pandey said. With the increasing diversion of sugar for ethanol production, the government also seeks to solve the problem of excess sugarcane/sugar, and help sugar mills clear the dues of farmers. 

In the long term, the central government also plans to promote maize production and use for ethanol production, Pandey added, saying sugar production is saturated and the excess will be diverted in the next 2-3 years. 

“EBP will ensure timely payment to cane farmers while also benefiting maize and paddy farmers by addressing their surplus grain problem and diverting at least 165 LMT grains, providing remunerations worth Rs 30,000 crore,” Pandey said. “The petrol replaced by ethanol blending will also save foreign exchange of Rs 30,000 crore.”

The secretary, however, clarified that the share of rice given for EBP from the central pool foodgrain buffer stock will remain minuscule and transitory.

“Almost 78,000 tonnes of rice from FCI stock will be used to promote ethanol production till the country achieves required maize production and diversion to the distilleries,” he said. 

The Food Corporation of India (FCI) gives rice to ethanol producers at a concessional rate of Rs 2,000/quintal against the estimated procurement and milling rate of Rs 3,700/quintal.

“The concessional subsidy for providing rice under EBP might not be added into the food subsidy and will be calculated and set aside as an ethanol subsidy in future,” Pandey said.

(Edited by Sunanda Ranjan)

Also Read: Why Modi govt must stop depending on petrol, diesel taxes to bridge its fiscal deficit


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