Ethanol Blended Petrol Programme
This topic provides information about Ethanol Blended Petrol Programme.
Ethanol, an anhydrous ethyl alcohol having chemical formula of C2H5OH, can be produced from sugarcane, maize, wheat, etc which are having high starch content. In India, ethanol is mainly produced from sugarcane molasses by fermentation process. Ethanol can be mixed with gasoline to form different blends. As the ethanol molecule contains oxygen, it allows the engine to more completely combust the fuel, resulting in fewer emissions and thereby reducing the occurrence of environmental pollution. Since ethanol is produced from plants that harness the power of the sun, ethanol is also considered as renewable fuel.
Ethanol Blended Petrol (EBP) programme was launched in January, 2003. The programme sought to promote the use of alternative and environment friendly fuels and to reduce import dependency for energy requirements.
Implementation of EBP programme
During 2001, pilot projects on Ethanol Blended Petrol started at 3 locations i.e. at Miraj, Manmad (Maharashtra) and Aonla/Bareilly in Uttar Pradesh. The Government of India decided to launch Ethanol Blended Petrol (EBP) Programme in January, 2003 for supply of 5% ethanol blended Petrol. Subsequent to this, Ethanol Blended Petrol programme was launched in January, 2003 in 9 States i.e. Maharashtra, Gujarat, Goa, Uttar Pradesh, Haryana, Punjab, Karnataka, Andhra Pradesh, Tamil Nadu and 4 Union Territories.
The Ministry of Petroleum & Natural Gas (MoP&NG) vide its notification dated 20th September, 2006 directed the Oil Marketing Companies (OMCs) to sell 5% Ethanol Blended Petrol subject to commercial viability as per Bureau of Indian Standards specifications in notified 20 States and 4 UTs with effect from 1st November, 2006. The additional 10 States included Delhi, Himachal Pradesh, Madhya Pradesh, Chandigarh, Kerala, Rajasthan, West Bengal, Odisha, Bihar and Jharkhand. However, North - Eastern States, J&K, Andaman & Nicobar islands and Lakshadweep Islands have not been covered under the programme. At present, including the state of Telangana, EBP programme is being implemented in 21 states and 4 UTs.
Procurement of ethanol
The OMCs are to procure ethanol from domestic sources. Government has notified administered price of ethanol since 2014. For the previous ethanol supply year 2017-18, the blending quantity of ethanol with petrol was 149.54 crore litres and the average blend percentage was 4.19 % which is the highest in the history of EBP Program.
For ethanol supply year 2018-19 (ie. 1st December 2018 to 30th November 2019), the Government has fixed remunerative price for ethanol procurement based on raw material utilized for ethanol production as follows:
- From C-heavy molasses at Rs. 43.46 per litre.
- From B heavy molasses / partial sugarcane juice at Rs.52.43 per litre.
- Price of ethanol for the mills, who will divert 100% sugarcane juice for production of ethanol thereby not producing sugar, has been fixed at Rs.59.19 per litre. This price will be paid by OMCs to those sugar mills who will divert 100% sugarcane juice for production of ethanol thereby not producing any sugar. If a sugar mill produces ethanol with a combination of B heavy molasses and sugarcane juice, the ethanol price derived from B heavy molasses route shall be payable by OMCs.
Further, the Government has also allowed production of ethanol from damaged food grains. OMCs are offering differential pricing of Rs. 47.13 per litre to incentivize this route.
Government has reduced the GST rate on ethanol meant for EBP Programme from 18% to 5%.
Subsequent to amendment in Industries (Development & Regulation) Act, 1951, giving control on production, movement and storage of ethanol to the Central Government, Central Government has been regularly interacting with the State Governments and other stakeholders to resolve the bottlenecks in smooth implementation of EBP Programme. Till now, Nine States have already implemented the amended provisions.
Department of Food & Public Distribution has introduced a Scheme for extending financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity. This Scheme aims to infuse Rs. 1332 crore via Interest Subvention route.