India raises C heavy molasses ethanol price by 14pc

The Indian government has increased prices of ethanol derived from C heavy molasses by 14pc on the year to 56.28 rupees/litre ($0.68/l) for the ethanol supply year between November 2023 and October 2024.

This is up from the Rs49.41/l that state-controlled Indian oil marketing companies (OMCs) paid for ethanol derived from C heavy molasses in the previous year. This is also the highest price increase in more than five years since the government split ethanol purchase prices into those derived from C heavy molasses, B heavy molasses and sugarcane juice.

The latest purchase price hike is to maximise ethanol production from C heavy molasses and boost overall ethanol availability for India's national Ethanol Blended Petrol (EBP) programme, Delhi said on 29 December. The EBP programme has set a target of 20pc ethanol blending in gasoline by 2025, from 10pc currently.

An earlier government directive in December eased restrictions on the use of sugarcane juice to produce ethanol and stated that all molasses-based distilleries should also endeavour to make ethanol from C heavy molasses.

Of the total ethanol used for blending in gasoline, around 61pc comes from B heavy molasses, 20pc from sugar syrup, 11pc from surplus rice, 6pc from damaged foodgrains and maize and the remaining 2pc from C heavy molasses, government data show.

Indian fuel retailers buy ethanol from ethanol producers like sugar mills and distilleries to blend with gasoline. Only domestically produced ethanol may be used for the EBP programme, with fuel ethanol imports restricted.

Erratic rains, especially in key growing regions, are likely to cut India's sugarcane production to 435mn t in the July 2023-June 2024 crop year from 491mn t the previous year, according to government estimates.

OMCs issued tenders to buy around 8.25bn l of ethanol for November 2023-October 2024 and received offers for around 5.6bn l. Sugarcane-based ethanol comprised 2.7bn l of the offers and around 2.9bn l was grain-based ethanol, according to sources in the sugar industry.

By Roshni Devi and Sarah Giam