The Grain Ethanol Manufacturers Association (GEMA) has written a letter to Union Minister for Petroleum and Natural Gas Hardeep Singh Puri, requesting a waiver of penalties for the shortfall in ethanol supplies during the Ethanol Supply Year (ESY) 2023-24. The association highlighted the challenges faced by Dedicated Grain Ethanol Plants (DEPs), which have struggled to meet their ethanol supply commitments to Oil Marketing Companies (OMCs) due to unexpected disruptions in feedstock availability.
In the letter, GEMA acknowledged the impressive growth of the grain ethanol industry in recent years, noting that capacity has surged from 30 crore liters to 800 crore liters in just four years, driven by the government’s push for a 20% ethanol blending target by 2025 under the Ethanol Blended Petrol (EBP) Programme. This has been one of the fastest greenfield expansions in any industry segment in our country. However, the association pointed out that the sector is still in its early stages, with many producers being young entrepreneurs who have made significant investments in setting up Dedicated Grain Ethanol Plants.
One of the key challenges facing the industry, according to GEMA, has been the the withdrawal of surplus grain by the Food Corporation of India (FCI). It has created a significant challenge. The nodal agencies assured the supply of surplus grain in case of feedstock shortages. With the sudden withdrawal, the industry is now facing severe uncertainty.
According to estimates by GEMA, the industry had contracted to supply 445-450 crore liters of ethanol to the Oil Marketing Companies (OMCs) for ESY 2023-24. Despite their best efforts, the expected supply is estimated to be around 390-400 crore liters, even after a 15-day grace period to complete the supplies. As a result, a shortfall of approximately 50 crore liters is anticipated, which would attract a penalty of Rs 110 crores.
In light of these challenges, GEMA has requested that the penalties for this shortfall be waived, given the industry’s commitment to supporting the government’s ethanol blending goals and the unforeseen circumstances that have led to the supply gap.
The letter urges Minister Puri to provide support and intervention to ensure the continued growth and stability of the grain ethanol industry.
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