Hike in ethanol price on cards as govt looks to address problem of grain supplies

The government is exploring options to address the issue of the non-availability of feedstocks like broken rice and maize that is being faced by ethanol manufacturers. According to Food Secretary Sanjeev Chopra, the distilleries are facing an issue due to the non-availability of rice. They have told me the prices of maize and broken rice are high.

“This issue is actually under our consideration. We are aware of the problem. Very shortly, we will take a suitable decision,” a PTI report quoted him as saying. Notably, the state-run Food Corporation of India had last month stopped the supply of rice from its depots to ethanol makers.

Ethanol is an organic compound that is produced from biomass. It is blended with petrol. At present, 10 per cent ethanol is blended into petrol, and the government is looking to double this by 2025. The reason why ethanol is blended with petrol is because of its higher octane number than gasoline, which contributes to improving the octane number of petrol. Ethanol has an insignificant amount of water in it.

The report said that industry body ISMA is demanding a hike in ethanol prices. According to the Food Secretary, a committee is already deliberating this issue. “Whether the government will consider raising ethanol prices in the last month of this ethanol year (December-November). That is something that the government will take a call. No decision has been taken yet,” he said.

Commenting on the development Rajinder Mittal, MD, BCL Industries, said that a price hike in ethanol from maize and damaged food will be good news for grain-based ethanol players, as they were previously dependent only on surplus rice. Only 150 crore liters were made from FCI surplus rice out of the 600 crore required.

“Going ahead, the industry players will have leeway to go into 3 sources of raw material, now majorly maize and damaged food grains as surplus rice policy is still awaited. This is a good step for the industry as players who have a deeper understanding of sourcing the raw material at cheaper rates and deep connects with farmers will benefit more going ahead,” he said.

“Several leading players have stored maize at cheaper rates already and were waiting for the policy to come in. They will benefit from the rate increase as they have got capacity running and huge raw material procured at much lower prices,” he added.

According to the Food Secretary, ethanol blending with petrol has reached 11.7 per cent so far, and is hopeful of achieving the target of 12 per cent this year. He added that the government is looking at the shortage of grains for ethanol production. As a result, the government is now encouraging maize.

Maize is used as an input for ethanol production globally. It was not happening in India somehow. He added that the plan is to increase maize production in the next three years so that more maize is available for ethanol production.

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