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Informist, Wednesday, Jun. 4, 2025

 

By Afra Abubacker

 

NEW DELHI – With the government expanding the quantum of surplus rice available for ethanol production, oil marketing companies have revised their ethanol supply orders for 2024–25 (Nov–Oct) to 10.50 billion litres, up from the previously allocated 9.97 billion litres, industry sources said. Industry sees the supply of ethanol sourced from maize slipping slightly and surplus rice rising.

 

The revised target comes after the Centre directed the Food Corp. of India in May to earmark 5.2 million tonnes of surplus rice for ethanol use--more than double the earlier cap of 2.4 million tonnes. Consequently, ethanol orders from FCI rice are expected to surge to 3.45 billion litres, up from the earlier 674 million litres.

 

In contrast, orders for ethanol made from maize are likely to be scaled down to 3.34 billion litres, compared with an earlier allocation of 4.84 billion litres. "Maize was in short supply, and many ethanol manufacturers had applied in February to convert their orders from maize to rice," an industry official said.

 

Oil marketing companies procure ethanol from distilleries to blend with petrol as part of India's push toward cleaner mobility. To achieve 20% ethanol blending by 2025–26, India needs about 10.16 billion litres of ethanol annually.

 

While the revised allocations appear sufficient to meet this blending target on paper, industry stakeholders remain cautious. "Although ethanol production from grains is financially viable, the industry faces several headwinds, like inordinate delays in payments from OMCs and bottlenecks in supply of rice from FCI depots," the official said.

 

SUPPLY SHORTFALLS

As of May 4, total ethanol supply stood at 4.7 billion litres, covering just over 44% of the 10.5-billion-litre orders. Of this, grain-based distillers supplied 2.5 billion litres, or 36% of their revised 7.1-billion-litre allocation. In contrast, molasses-based distillers fared better, delivering 2.1 billion litres, or about 63% of their 3.4-billion-litre allocation.

 

The widening supply gap has been attributed to stagnant ethanol procurement prices and rising feedstock costs. For 2024–25, the government has increased procurement rates only for C-heavy molasses to INR 57.97 per litre. Ethanol made from sugarcane juice is priced at INR 65.61 per litre and B-heavy molasses at INR 60.73 per litre, unchanged from 2022-23. Ethanol from damaged food grain is priced at INR 64.00 a litre, and FCI rice is INR 71.86 a litre. 

 

The supply shortfall so far is most striking in ethanol sourced from grain amid increased competition for maize from the starch industry and poultry. "My expectation from grain sector is 5.50 billion litres instead of 7.10 billion litres ordered," an official said. 

 

While ethanol supply from sugarcane feedstocks has so far fared better, this supply stream is expected to taper off due to the completion of the cane crushing season. The industry pegs total ethanol supply from sugarcane feedstocks in 2024–25 at around 2.50 billion litres, falling short of the 3.4 billion litres allocation, the official said. "So total shortfall (from grains and sugar) might be about 2.60 billion litres," the official said. End

 

Edited by Deepshikha Bhardwaj

 

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