Ethanol price hike: Govt exploring solutions to address problem of grain supplies for ethanol making

The government is exploring options to address the issue of non-availability of feedstock like broken rice and maize that is being faced by ethanol manufacturers.

According to Food Secretary Sanjeev Chopra, distilleries are facing an issue due to non-availability of rice. They have told prices of maize and broken rice are ruling high.

"This issue is actually under our consideration. We are aware of the problem. Very shortly, we will take a suitable decision," he said.

Commenting on the development, Rajinder Mittal, MD, BCL Industries, said that any hike in around Rs 5-6 per litre will be a great news for grain-based ethanol players. They were earlier dependent only on surplus rice. Only 150 crore litre was made from FCI surplus rice out of 600 crore requirement.

Notably, state-run Food Corporation of India (FCI) had last month stopped the supply of rice from its depots to ethanol makers.

"Now industry players will have leeway to go into 3 sources of raw material (now majorly maize and damaged food grains as surplus rice policy is still awaited). This is a good step for the industry as players who have a deeper understanding of sourcing the raw material at cheaper rates and deep connects with farmers will benefit more going ahead," Mitttal said.

"The industry will benefit from the rate hike," he added.

On industry body ISMA's demand for a hike in ethanol price to Rs 69.85 per litre, Food Secretary Sanjeev Chopra said a committee is deliberating this issue.

"Whether the government will consider raising ethanol prices in the last month of this ethanol year (December-November). That is something that the government will take a call. No decision has been taken yet," he added.

The Secretary also mentioned that the share of grain-based ethanol has gradually increased in the last 2-3 years. It stood at 17 per cent in 2021-22. In the current year, it has already crossed 17 per cent.

The ethanol blending with petrol has reached 11.7 per cent so far and is hopeful of achieving the target of 12 per cent this year, he said. He added that the government is looking at the shortage of grains for ethanol making. As a result, the government is now encouraging maize.

Maize is used as an input for ethanol production globally. It was not happening in India somehow. The plan is to increase maize production in the next three years so that more maize is available for ethanol making, he added.

Earlier this year, Prime Minister Narendra Modi had rolled out petrol blended with 20 per cent ethanol at select petrol pumps in 11 states and UTs as part of a programme to increase use of biofuels to cut emissions as well as dependence on foreign exchange-draining imports.

At present, 10 per cent ethanol is blended in petrol (10 per cent ethanol, 90 per cent petrol) and the government is looking to double this quantity by 2025.