Earlier, the target was set for 2030 and the current ethanol blending level in petrol is around 8.5%. With this capacity expansion, Dalmia Bharat Sugar will divert around 1.5 lakh tonne of sugar for ethanol production, compared with 60,000 tonne now, the company said.
The expansion will take place at the company’s Jawaharpur and Nigohi plants in Uttar Pradesh and the Kolhapur unit in Maharashtra. One new distillery will be set up at Ramgarh, UP. “As the government cannot provide subsidies on sugar exports after 2023 due to WTO norms, the sugar manufacturers will now be able to divert that sugar for ethanol purposes,” the company added.
Under the Ethanol Blended Petrol (EBP) programme, the government has already reintroduced the administered price mechanism for ethanol procurement, allowing production from multiple feedstock like heavy molasses, sugarcane juice, sugar, sugar syrup, damaged foodgrain, maize and surplus rice stocks with Food Corporation of India.
The sugar mills and distilleries are free to set up ethanol plants after obtaining statutory clearances and the government has already notified an interest subvention scheme to assist setting up of these plants. Ethanol procured under the EBP programme falls in the 5% GST slab.
The sugar industry, which was looking to find ways to balance sugar production with consumption, is seen to benefit from the programme with export opportunities coming down. This is also likely to translate into reasonable prices for the sweetener and keep inventory under control.
State-run oil marketing companies received 66.5 crore litre ethanol in Ethanol Supply Year 2016-17 (December 2016–November 2017), which increased to 173 crore litre in supply year 2019-20.