Economy

Oil companies, sugar mills work in sync to put India’s ethanol blending programme on track

TV Jayan/Richa Mishra New Delhi | Updated on May 23, 2021

318 crore litres of ethanol have been contracted for supply during the current ethanol year

India seems to be on track with its ambitious plan to blend up to 20 per cent ethanol in petrol. In April, public sector oil refiners-cum-retailers have been able to achieve an ethanol blending of 7.63 per cent at the national level. In fact, as many as 11 States across the country have managed to touch 10 per cent blending.

A party pooper

According to Abinash Verma, Director General of Indian Sugar Mills Association (ISMA), till last week, 318 crore litres of ethanol have been contracted for supply during the current ethanol year (December 2020 to November 2021). Butthe recent drop in petrol consumption has been a party spoiler.

“Petrol consumption is not as much as the oil marketing companies (OMCs) had estimated for various depots. Therefore, they are not able to lift the committed quantities for specific depots. As a result, they are asking us to deliver ethanol to other locations,” said Verma. More often than not, the newly assigned State is a faraway one and ethanol makers are expected to deliver without reimbursement of the actual transport cost, he added.

Even OMCs agreed that there is a drop in offtake of ethanol because of lesser consumption of motor spirit. “OMCs are procuring ethanol proportionate to MS sales. Due to lockdown there may be congestion at certain locations, owing to reduction in MS demand. OMCs are taking steps to increase the number of depots where ethanol can be stored,” said an oil company official. According to Verma, the transport rates that ethanol makers are getting from OMCs is much lower than actual cost. “We have asked them to give us either full transport cost or take ethanol from our factories. Or they should engage their own transport agencies,” he said. An oil company official said that they are looking into the problem of cross-country transport and a revision in the long-distance freight rates is on the cards. Verma also suggested that OMCs could think about moving ethanol by Railways which would work out cheaper.

Blending target

India has already advanced its 20 per cent blending target already from 2030 to 2025. “If, for instance, we need to achieve 10 per cent blending by next year, we need to know that all States will not be able to achieve it. So, we need to plan to blend 12 to 15 per cent in some States to compensate for this shortfall,” said Verma. Studies have shown that up to 13 per cent blending can be done without making any changes to the existing car engines, he said.

The Society of Indian Automobile Manufacturers (SIAM) has, in principal, committed to start making E20 material compatible vehicles from 2023. As per the plan shared by SIAM, all new vehicles will be able to use 20 per cent ethanol blending by2023. By 2025 onwards, the new vehicles released will not just E20 material-compatible, but will also have engines tuned for the same. All existing vehicles, on the other hand, continue to use fuels blended with 10 per cent ethanol.

The government has spelt out an ambitious plan to make ethanol available in sufficient quantities. Apart from using sugarcane juice, B-class and C-class molasses produced from sugarcane crushing, it plans to use surplus rice, damaged food grains and maize for producing ethanol.

To make it attractive for ethanol makers, ethanol produced from these sources are differentially priced; the prices are also revised upwards annually.

Published on May 23, 2021

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