Hike in ethanol prices to help sugar mills to clear cane dues

The Cabinet Committee on Economic Affairs (CCEA) on Thursday approved hikes of Rs 1.94-3.17/litre in the reserve prices of different categories of ethanol to be purchased by oil marketing companies (OMCs) under the ethanol blending programme during the 2020-21 season to help sugar mills earn more and clear the cane dues of farmers. Declining realisation from sugar sales over the last few years have forced the sugar factories to diversify into the green fuel.

Ethanol made from sugarcane juice/sugar/sugar syrup route has been increased to Rs 62.65/litre from Rs 59.48, information and broadcasting minister Prakash Javadekar said after the CCEA meeting. While the increase is higher at Rs 3.34/litre for ethanol made from ‘B heavy molasses’, there is a moderate rise of Rs 1.94/ litre in ethanol from ‘C heavy molasses’. The revised ethanol prices are Rs 57.61 and Rs 45.69 a litre when made from B and C heavy molasses, respectively.

The government has been implementing EBP programme wherein oil marketing companies sell petrol blended with ethanol up to 10%. Ethanol procurement by OMCs increased from 38 crore litre in ethanol supply year (ESY) 2013-14 to over 195 crore litre in ESY 2019-20 (December-November).

The CCEA also approved that 100% of food grains and 20% of sugar shall be mandatorily packed in diversified jute bags, a move that could give an impetus to the diversification of the jute industry.

The price of ethanol from C-heavy molasses route be increased from Rs 43.75 per litre to Rs 45.69, from B heavy molasses route be increased from Rs 54.27litre to Rs 57.61 and ethanol from sugarcane juice/sugar/sugar syrup route be increased from Rs 59.48/litre to Rs 62.65.

“Additionally, GST and transportation charges will also be payable. Public sector oil marketing companies have been advised to fix realistic transportation charges so that long distance transportation of ethanol is not disincentivised,” the government said in a statement.

In order to offer fair opportunity to the localised industry within the state and reduce crisscross movement of ethanol, oil marketing companies would decide the criteria for priority of ethanol from various sources taking in account various factors like cost of transportation, availability, etc.

Further, regarding jute bags, it will also be mandatory that initially 10% of the indents of jute bags for packing foodgrains would be placed through reverse auction on the GEM portal. This will gradually usher in a regime of price discovery. The Government has expanded the scope of mandatory packaging norms under the Jute Packaging Material (JPM) Act, 1987.

In case of any shortage or disruption in supply of jute packaging material or in other contingency/exigency, the ministry of textiles may relax these provisions further, up to a maximum of 30% of the production of foodgrains over and above the provisions.

The CCEA also approved the Dam Rehabilitation and Improvement Project (DRIP) Phase II & Phase III with the financial assistance of the World Bank (WB), and Asian Infrastructure Investment Bank (AIIB) to improve the safety and operational performance of selected dams across the whole country, along with institutional strengthening with system wide management approach. The project cost is `10,211 crore. The project will be implemented over a period of 10 years duration in two Phases, each of six years duration with two years overlapping from April 2021 to March 2031.