Oil Firms Bar Ethanol From Sugar For Blending In Fuel, Pg12

Key Highlights:

• State-run oil marketing companies (OMCs) have excluded ethanol derived from sugar cane juice, sugar syrup, and B-heavy molasses from their 2026-27 procurement tender.
• The decision aims to safeguard domestic sugar supplies amidst concerns over availability and rising prices due to poor rainfall in key producing states.
• The tender, issued by Bharat Petroleum Corporation Ltd. (BPCL), seeks approximately 11 billion litres of ethanol to achieve a 20% blending target in petrol.
• The procurement price for maize-based ethanol has been reduced from ₹71.86 to ₹68.86 per litre.
• Permitted feedstocks now include maize, broken rice, surplus rice from Food Corporation of India (FCI), and C-heavy molasses.

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Detailed Insights:

• The Government of India has directed that sugar diversion for ethanol production be reduced to zero for the ethanol supply year 2026-27.
• This marks a significant shift in feedstock sourcing for India's Ethanol Blending Programme (EBP), which previously utilized both grain and sugar-based ethanol.
• The policy change balances energy security objectives, such as reducing crude oil imports, with the need to maintain adequate food supplies.
• Poor rainfall in major sugar-producing states like Maharashtra and Karnataka has raised concerns about lower sugar output, influencing this policy.
• India, the world's largest sugar consumer, aims for E20 (petrol with 20% ethanol) as a nationwide standard to decrease oil import dependence.
• The new procurement strategy is expected to increase reliance on grain-based ethanol production, making feedstock availability and distillery capacity critical.

Key Concepts Involved:

• Ethanol Blending Programme (EBP): A government initiative to blend ethanol with petrol to reduce crude oil imports and lower emissions.
• E20: A blend of petrol containing 20% ethanol, set as India's nationwide standard for fuel.
• B-heavy molasses: A byproduct of sugar production that still contains a significant amount of sugar, often used for ethanol production.
• C-heavy molasses: The final byproduct of sugar production with minimal sugar content, also used as a feedstock for ethanol.
• Food Corporation of India (FCI): A government agency responsible for food grain procurement, storage, and distribution to ensure food security.