Grain-based ethanol manufacturers demand dual pricing for maize, rice feedstock

Grain-based ethanol manufacturers have demanded that the Centre follow dual pricing for the products made from maize and rice due to difference in realisation, potentially helping the government’s crop diversification plan.

“Similar to the sugarcane-based ethanol plants, the government should have differential pricing for all grain-based plants and additional incentives for those who use maize,” said an industry official. The recovery rate from maize to ethanol is 385 litres per tonne whereas it is about 440 litres per tonne in case of rice, the official said.

Oil marketing companies (OMCs) are offering to buy at ₹52.90/litre from grain-based ethanol plants, whereas they buy in three price bands from sugar mills, said owner of a ethanol plant. The government should offer to buy at ₹55/litre from those who are using maize as feedstock, he said.

The ex-mill price of ethanol fixed by the government for C heavy molasses is ₹46.66/litre, for B heavy molasses it is ₹59.08/litre and Rs 63.45/litre for sugarcane juice/sugar/sugar syrup for Ethanol Supply Year 2021-22 (ESY December-November). The GST and transportation costs are also reimbursed to the suppliers of ethanol.

So far, 196 projects with a combined capacity to annually produce 859.11 crore litres of ethanol from grains like rice and maize have been approved by Union Food Ministry since January 2021. Currently, the country has 116 grain-based ethanol plants with an installed capacity of 268 crore litres.

The government has also authorised OMCs to decide the pricing for Second Generation (2G) ethanol and they are also setting up such bio refineries at different places -- Panipat in Haryana, Bathinda in Punjab, Bargarh in Odisha, Numaligarh in Assam and Devangere in Karnataka.

During last ESY, 49,233 tonnes of rice were lifted by manufacturers from the Food Corporation of India (FCI) for production of 2.17 crore litres of ethanol. In current ESY 2021-22, about 11,000 tonnes of rice have been lifted so far against the total allocation of 4,58,817 tonnes.

Interest subvention scheme

On December 30, 2020, the Cabinet had approved an interest subvention scheme to set up grain-based distilleries or expansion of existing plants to produce ethanol. But the benefit of the scheme was limited to only standalone distilleries which use dry milling process. New dual feed distilleries or expand of existing dual feed plants, as well as for converting from single feed (molasses/grain) to dual feed were also allowed to avail credit under the scheme.

The government bears interest subvention for five years including one year moratorium against the loan availed from banks at 6 per cent or 50 per cent of the rate of interest charged by banks, whichever is lower. Interest subvention is available to only those distilleries which agree to supply at least 75 per cent of their ethanol production to oil marketing companies (OMCs) for the ethanol blending programme (EBP). The EBP has already reached 8.4 per cent since April and may achieve the 10 per cent target by March 31, industry officials said. The government aims to scale up the EBP to 20 per cent by 2024-25.