India can achieve 10% ethanol blending target in 2022

During the current Ethanol Supply Year (December 2020-November 2021), oil marketing companies (OMCs) have targeted to source 297 crore litres (CL) of ethanol. Of this, approximately 262 CL will come from sugar mills and rest from other feedstocks such as damaged foodgrains, maize and surplus rice.

Considering the large investments being made in adding ethanol production capacities, India can achieve the target as stipulated in the National Bio-fuel Policy in 2022, Abinash Verma, Director-General, Indian Sugar Mill Association (ISMA) told BusinessLine . Excerpts from the interview:

Are sugar mills achieving the target to produce ethanol?

The National Bio-fuel Policy has set a target to achieve 10 per cent ethanol blending with petrol by the year 2020, and 20 per cent ethanol blending target by 2030, which has been advanced to 2025, meaning that 20 per cent ethanol blending target has to be achieved by 2025. During the current Ethanol Supply Year 2020-21, the OMCs have contracted for about 297 crore litres of ethanol of which approximately 262 crore litre is with sugar mills, rest is with other feedstocks like damaged foodgrains, maize and surplus rice. Out of this contracted quantity, the total lifting stands at about 80 crore litres as on March 8, 2021, the blending percentage achieved is seven per cent.

Can India achieve the target set by the National Bio-fuel Policy by 2022?

From the above figures, it can be assessed that if the lifting goes well in the current supply year and entire contracted quantity is lifted, then the ethanol blending percentage for the current supply year is 8.5 per cent. Therefore, and considering the large investments happening in the ethanol production capacities, India can achieve the target of 10 per cent blending in 2022.

What are the hurdles in ethanol supply?

Several depots, especially the new ones and new States which have not taken ethanol earlier, are not geared up to receive ethanol. In several depots where contracts have been signed, the offtake is low and OMCs are insisting to shift the quantity to other depots in far away States.

The problem is that the rate at which transportation cost is being reimbursed by OMCs to the ethanol suppliers are much below the actual expenditure. Suppliers are incurring a loss of ₹3-5 per litre, resulting in lower realisation, discouraging them to move ethanol to far away depots and distant States. The transport rates need to be revised immediately if we have to achieve the all India target of 10 per cent in all States next year.

Has Covid-19 affected the ethanol supply?

The demand for petrol is lower than expected due to Covid, and therefore in some depots, the demand estimated by OMCs seem to have gone wrong. That has, in turn, marginally reduced the requirement of ethanol too in some depots.

Is the blending process still a problem?

Some of the new depots, where blending has just begun, seem to be not aware of the blending process and also don’t have the required infrastructure to receive ethanol supplied as per the contracts. That is causing difficulties to ethanol suppliers.

The industry has requested the government to take immediate steps to improve the situation, so that ethanol supplies and blending target for the current supply year don’t get affected.

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