OMCs hike procurement prices for ethanol to boost production

Government-owned oil marketing companies (OMCs) have raised procurement prices for ethanol derived from C-heavy molasses by Rs 6.87 per litre to Rs 56.28 per litre. The adjustment, confirmed by industry sources and a document reviewed by Reuters on Friday, is part of an initiative to stimulate ethanol production, primarily used for blending with petrol.

Over 10 per cent of petrol sold in the country currently comprises ethanol, and government has set an ambitious target to increase blending to 20 per cent by 2025. The rise in procurement prices is anticipated to encourage greater production of ethanol, aligning with the nation's renewable energy and environmental goals.

Earlier this year, the government issued directives to sugar mills, urging them to refrain from using cane juice or syrup in ethanol production. The move aimed to augment sugar supplies by limiting ethanol output. As a result, mills were permitted to produce ethanol exclusively from C-heavy molasses, a by-product of cane that possesses minimal sugar content.

The adjustments in procurement prices reflect the government's strategy to manage the ethanol supply chain and balance the interests of the sugar and ethanol industries. The move is part of government’s broader efforts to enhance energy sustainability and reduce its carbon footprint by promoting the use of biofuels.

(With Reuters inputs)