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Demand for ethanol rise as government decides to blend it with Petrol & Diesel

India News: As Crude crosses $70/barrel mark and Petrol and Diesel prices in India inching towards a Rs.100/litre soon, the demands for ethanol rises up as government decided to blend it with petrol.

India News: As Crude crosses $70/barrel mark and Petrol and Diesel prices in India inching towards a Rs.100/litre soon, the demands for ethanol rises up as government decided to blend it with petrol.

Demand for ethanol rise as government decides to blend it with Petrol & Diesel - The Wall Post
Demand for ethanol rise as government decides to blend it with Petrol & Diesel

As ethanol is available cheaper and demands rise, sugarcane farmers and refinery owners are hopeful to earn better from this new found demand.

Oil marketing companies are soon to start procuring a record volume of 283 crore litres of ethanol from refineries this year. The number for demand is definitely higher than previous years’ 167 crores; 179 crores; 150 crores litres of ethanol procurement. However, there is a basic price difference based on the types of molasses of ethanol extractions.

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Currently there is a high demand for ethanol derived from B-molasses and cane juice rather than that derived from C-molasses. Ethanol from B-molasses are sold for Rs.57.61/liter and cane juice at Rs.62.65/liter. Ethanol from C-molasses cost less than both of them at Rs.45.69/liters. Taxes on ethanol have been reduced from 18% to 5% which makes them cost less than petrol and diesel.

Ethanol costs only Rs.62.65/liter in India and this encourages OMCs to blend ethanol more with petrol. India’s ethanol production has doubled from 215 crore liters in 2014-15 to 426 crore liters of ethanol in 2019-20. You should also know that from each stage of molasses, different levels of ethanol can be derived.

Most commonly ethanol has been derived from the C-molasses stage where only 10.67 liters of ethanol can be produced, whereas from B-molasses stages, 19 liters of ethanol can be produced. Refineries can choose to ignore producing sugar completely and produce upto 84 liters of ethanol from one ton of sugarcane.

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Many sugarcane refineries in India are now completely moving from producing sugars to producing ethanol as it has been profitable these years. This business helps sugarcane refinery owners to make timely payments to farmers as well. As sugar has been excessively produced by many refineries, owners were not really able to make money out of it. As a result, they had a plenty of payment balances to farmers who supply them.

The government has estimated ethanol procurement to go up to 900 liters in 2025, 610 liters which sugar based refineries will serve and the remaining 290 liters to be served by other grain-based refineries.