Government raises procurement price of C-heavy molasses ethanol by Rs 1.69/litre

Union Cabinet on Wednesday approved a three per cent increase in the procurement price for ethanol made from C-heavy molasses to Rs 57.97 per litre for the 2024-25 supply year, while keeping rates unchanged for other feedstocks.

The price increase, aimed at boosting ethanol production from sugar industry by-products, comes as India pushes to meet its accelerated target of 20 per cent ethanol blending in petrol by 2025-26. Prices for ethanol produced from B-heavy molasses and sugarcane juice/ sugar/ sugar syrup remain unchanged at Rs 60.73 and Rs 65.61 per litre, respectively.

The decision was taken at a meeting of the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi.

Information and Broadcasting Minister Ashwini Vaishnaw told reporters that C-heavy molasses contains very little sugar content compared to other sugarcane feedstock.

"The more we encourage C-heavy molasses for ethanol production, it will be beneficial for both farmers and environment," he said.

Public sector oil marketing companies (OMCs) will procure ethanol at the revised rates during the ongoing 2024-25 supply year (November-October) under the government's Ethanol Blended Petrol (EBP) programme.

The government said in a statement that the 3 per cent price increase for C-heavy molasses ethanol aims to ensure sufficient availability to meet increased blending targets.
As in previous years, GST and transportation charges will be paid separately to support sugarcane farmers.

The price adjustment would help ensure adequate ethanol supplies to meet increased blending targets. State-run oil marketing companies aim to achieve 18 per cent blending in the current supply year ending October 2025.

All India Sugar Trade Association (AISTA) Chairman Praful Vithalani said the selective price hike as a "precautionary step", suggesting the government may want to boost sugar production by not increasing prices for syrup and B-molasses derived ethanol.

Ethanol blending by public sector OMCs has risen from 38 crore litres in 2013-14 to 707 crore litres in 2023-24, achieving average blending of 14.60 per cent.

The EBP programme has generated foreign exchange savings of over Rs 1,13,007 crore and substituted about 193 lakh tonnes of crude oil in the decade until December 1, 2024, the statement added.