In a bailout for the sugar sector battling with surpluses, the Centre on Wednesday announced a massive hike in the price of ethanol produced directly from sugarcane juice.
Petroleum Minister Dharmendra Pradhan announced that procurement price of ethanol derived from 100% sugarcane juice has been fixed at Rs 59.13 per litre against the existing rate of Rs 47.13 per litre.
The decision of the Cabinet Committee of Economic Affairs (CCEA) is expected to help sugar mills saddled with surplus stock of the sweetener to divert the cane juice for ethanol production.
The price for ethanol produced from B-heavy molasses was hiked to Rs 52.43 a litre from the current Rs 47.13 but that for ethanol produced from C-heavy molasses was reduced marginally to Rs 43.46 from Rs 43.70.
The move would help sugar mills quickly release arrears of cane farmers, which stands at over Rs 13,000 crore. As much as 40% of these dues are in Uttar Pradesh alone.
Pradhan said the decision would increase the availability of ethanol for blending it with petrol thus reducing the dependency on oil imports.
The government is also looking at scaling up ethanol blending to 10% in the next couple of years from existing 4-5%.
“Oil marketing companies are advised to prioritise ethanol from 100% sugarcane juice, B-heavy molasses / partial sugarcane juice, C-heavy molasses, and damaged food grains/other sources, in that order,” Pradhan said.
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