Moving towards a free market structure, the Cabinet Thursday approved a new mechanism for revising price of sugarcane-extracted ethanol used for blending in petrol, resulting in drop in rates by Rs 3 to Rs 39 per litre. The price of ethanol will be determined on the basis of prevalent price of sugar in the open market as also demand-supply situation, Oil Minister Dharmendra Pradhan said.

The Cabinet Committee on Economic Affairs has approved the mechanism for revision of ethanol price for supply to public sector oil marketing companies (OMCs) to carry out the Ethanol Blended Petrol (EBP) Programme,” an official statement said.

It said that for ethanol supply for the period from December 1, 2016 to November 30, 2017, the administered price of ethanol for the EBP programme will be Rs 39 per litre.

Besides, charges will be paid to the ethanol suppliers as per actuals in case of excise duty and VAT/GST and transportation charges as decided by OMCs.

Ethanol Blending Programme (EBP) in India

Ethanol blending is the practice of blending petrol with ethanol. Many countries, including India, have adopted ethanol blending in petrol in order to reduce vehicle exhaust emissions and also to reduce the import burden on account of crude petroleum from which petrol is produced. It is estimated that a 5% blending (105 crore litres) can result in replacement of around 1.8 million Barrels of crude oil . The renewable ethanol content, which is a by product of the sugar industry, is expected to result in a net reduction in the emission of carbon dioxide, carbon monoxide (CO) and hydrocarbons (HC). Ethanol itself burns cleaner and burns more completely than petrol it is blended into. In India, ethanol is mainly derived by sugarcane molasses, which is a by-product in the conversion of sugar cane juice to sugar.

Source: Times of India, arthapedia.in, economictimes