In a major relief to grain-based ethanol producers, the government has revised the provision for the sale of rice stocks exceeding buffer stocking norms under the Open Market Sale Scheme (Domestic) (OMSS(D)) Policy for the year 2024-25 and reduced the price for distilleries producing ethanol. The government has set the reserve price at Rs 2,250 per quintal (fixed) pan India for the sale of rice to distilleries for ethanol production. Earlier, it was fixed at Rs 2,800 per quintal.
The sale of FCI rice for ethanol production will be permitted only to distilleries registered with Oil Marketing Companies (OMCs) as suppliers of ethanol. Distilleries along with a copy of signed contract with OMCs regarding supply of ethanol may approach the FCI depot of their choice. It will allocate the rice as per the quantity of ethanol allocated to distilleries in their contract with OMCs. The OMCs will furnish details of quantity of ethanol produced from FCI rice, received at respective depot every month.
The reserve price for sale of rice to ethanol distilleries for production of ethanol is fixed for a total quantity not exceeding 24 LMT. For this purpose, old rice can be utilized to the extent feasible.
As per order, tender under Cycle 3 (C3) for the supply of about 110 crore litres of ethanol during ESY 2024-25 should be restricted to ethanol produced using FCI rice.
The reserve price of rice has been fixed at Rs 2,250 per quintal (Pan-India) for sale to State Governments, State Government Corporations, and Community Kitchens, without the requirement of participating in e-auctions.
The OMSS(D) Policy for 2024-25 will be valid till 30th June 2025.
In August 2024, the government lifted a ban on rice sales imposed in 2023 on ethanol distilleries by allowing the purchase of 23 lakh tonnes (during Aug-Oct 2024) from the central pool grain stocks. The rice was to be sold through e-auction under the OMSS of the FCI. However, there were no takers for rice under the OMSS from ethanol manufacturers, citing a lack of financial viability.
The decision to reduce the price for FCI rice for ethanol production is likely to boost the ethanol production.
In the current ESY 2024-25, the total allocation (cycle 1 and cycle 2) for ethanol supply so far stands at around 930 crore liters.
In the ongoing Ethanol Supply Year (ESY) 2024-25, ethanol blending in petrol reached 18.2 percent in December, and cumulative ethanol blending from November 2024 to December 2024 touched 16.4 percent. The ethanol blending percentage achieved during the month of December 24 is the highest till date.
As per the Ministry of Petroleum & Natural Gas (MoPNG), under the EBP programme, ethanol supplies have increased from 38 crore liters in the ESY 2013-14 to 707.4 crore litres in ESY 2023-24, achieving an average blending of 14.6% ethanol in petrol.
The government has set a target of 20% ethanol blending by ESY 2025-26 and is confident of achieving this goal. However, to meet this target, approximately 1,016 crore liters of ethanol will be required, totaling 1,350 crore litres when accounting for other uses.
