Cabinet hikes ethanol procurement price by 3%

New Delhi: The Union Cabinet, on Wednesday, decided to increase the procurement price of ethanol by 3 per cent to Rs 57.97 per litre, a move which boosted the share prices of sugar and ethanol-linked companies.

For the 2024-25 ethanol supply year (November-October), public sector oil marketing companies will pay Rs 57.97 per litre for procurement of ethanol from the manufacturers against the earlier rate of Rs 56.58 per litre.

Briefing media after the cabinet meeting, Union Minister Ashwini Vaishnaw said that the hike in procurement price would benefit farmers and ensure sufficient availability of ethanol to meet the increased blending target.

He also informed that the centre has decided to advance the target for achieving 20 per cent ethanol blending in petrol to the ethanol supply year 2025-26 from the previous target of 2030.

In August 2024, ethanol blending in petrol stood at 13 per cent. The minister informed that by the end of the current ethanol supply year, the ethanol blending in petrol is expected to increase to 18 per cent.

Ethanol blending by public sector oil marketing companies has increased from 38 crore litre in 2013-14 to 707 crore litre in 2023-24. The average ethanol blending in petrol sold by public sector OMCs stood at 14.60 per cent in ESY2023-24.

The cabinet’s decision led to a sharp rally in the share price of companies, which are involved in ethanol production. Share price of Shree Renuka Sugars surged 5.76 per cent. Balrampur Chini Mills rallied 3.45 per cent. Triveni Engineering and EID-Parry gained around 4 per cent.

"We met 10 per cent ethanol blending target for Ethanol Supply Year 2021-22, five months ahead of schedule, in June 2022. With the various enablers put in place, we have achieved more than 19 per cent blending and will soon achieve the 20 per cent blending target nearly six and half years ahead of the original target of year 2030 and one and a half year before the revised target of ESY 2026," Union Minister for Petroleum and Natural Gas Hardeep Singh Puri said in post on X.

During the last ten years, ethanol blending in petrol by OMCs has resulted in approximate savings of more than Rs 1.13 lakh crore ($14.4 billion) of foreign exchange and crude oil substitution of about 193 lakh metric tonnes, according to data shared by the Ministry of Petroleum & Natural Gas.