New Delhi/Bhopal: To ensure enough supply of ethanol for making E-20 fuel by 2023, the Centre on Tuesday said it is encouraging ethanol production from grains as well and has allocated 78,000 tonnes of rice from the state-run Food Corporation of India (FCI) at a subsidised rate of Rs 20/kg to distilleries for the current marketing year ending November.
For the current year, the government has allocated 78,000 tonnes of FCI rice for ethanol making against the commitment of 3 lakh tonnes, he said.
Out of which, eight distilleries from four states Punjab, Haryana, Bihar and Madhya Pradesh have contracted 66,000 tonnes of FCI rice, from which 3 crore litres of ethanol would be manufactured, a senior Food Ministry official told PTI separately.
The government said it has also approved 189 proposals for setting up of grain-based new/expansion of distilleries (with a total capacity of 765 crore litres) that will come up in the next three years under a government's interest subvention scheme notified on January 14, this year, it said.
A big push is being given for doubling ethanol distillation capacities by 2025 as the government is targeting 20 per cent ethanol blending with petrol by then from the current 8.5 per cent likely to be achieved in the 2020-21 marketing year (December-November).
The government has already notified that it would make E20 fuel available by April, 2023. E20 contains 20 per cent ethanol and 80 per cent gasoline. A pilot project of (bioethanol) E-100 dispensing from three locations at Pune has been launched recently.
Addressing the media on progress made in ethanol blending with petrol (EBP) programme, Food Secretary Sudhanshu Pandey said the government is encouraging ethanol production not only from molasses but also from grains like maize and rice to achieve the blending targets.
Asked the need for distributing FCI rice - procured for the purpose of food security - at a subsidised rate for ethanol making, the secretary asserted that the contribution of rice in ethanol production would be "miniscule" and it is "transitory".
Currently, the existing capacity of grain-based distilleries is just about 268 crore litres which is meant for making alcohol-based products, he said, adding it is therefore the government is promoting setting up of grain-based distilleries.
Further, Pandey said the Centre's focus is on encouraging ethanol production from maize and only in the absence of availability of maize as feed stock, rice would be used and it will be in "negligible" quantity.
"The rice utilisation (in ethanol making) is allowed to provide stability in case some capacity comes up... Rice-mix is provided to give continuity and a transitory phase so that if they do not have access to enough maize, then they can access to rice," he said.
The central government is already in talks with maize producing states in this regard. Moreover, maize-based distilleries are more profitable than rice and other grains. Globally, 73 per cent of total 10,000 crore litres of ethanol comes from maize and rest from molasses and other grains, he said.
FCI has almost 30 lakh tonnes of rice stock at the moment. Still, rice procurement is happening in Telangana and Andhra Pradesh.There is enough stock of foodgrains, he added.
According to the ministry, about 189 proposals out of 422 have been approved for setting up of new/expansion distilleries for making ethanol from grains so far which would have total installed capacity to make 765 crore litres.
The Secretary said that FCI rice given to distilleries for ethanol making will be treated as a subsidy given for industrial use.
"We are offering rice at Rs 20/kg to states from FCI godowns. Once we know the exact quantity that will be the subsidy for the industrial use of ethanol towards the blending programme," he said.
He further noted that ethanol production from sugarcane has limitations and the ethanol expansion is going to happen in grain-based distilleries only.
Asked if the consumer will get cheaper green fuel as a result of ethanol blending, the Secretary said when the country will start using 100 per cent flexi-vehicles with ethanol going forward, the respective government at that time will take a call.
He said the government is aiming ethanol production of 15,000 crore litres for achieving the blending target of 20 per cent by 2025. Of which, grain-based ethanol would be 740 crore litres and sugar-based 760 crore litres.
About 165 lakh tonnes of grains and 60 lakh tonnes of surplus sugar would be required for ethanol production in 2025, which is expected to reduce foreign exchange of Rs 30,000 crore on account of crude oil import, he added.
In the first six months of the ongoing 2020-21 marketing year, oil marketing companies have blended 143.05 crore litres of ethanol, which is 7.7 per cent blending. By the end of the marketing year, the country is expected to achieve 8.5 per cent blending, as per the ministry data.