In a significant relief for grain-based ethanol producers, the government has revised the provision for the sale of rice stocks exceeding buffer stocking norms under the Open Market Sale Scheme (Domestic) (OMSS(D)) Policy for the year 2024-25, reducing the price for distilleries producing ethanol. The new reserve price for the sale of rice to distilleries has been set at Rs 2,250 per quintal (fixed) across India, down from the previous price of Rs 2,800 per quintal.
Rice from the Food Corporation of India (FCI) will only be available to distilleries registered with Oil Marketing Companies (OMCs) as ethanol suppliers. These distilleries, along with a signed contract with OMCs detailing the ethanol supply, can approach the FCI depot of their choice. Allocation will be made based on the ethanol quantity specified in the distillery’s contract with OMCs. OMCs will report monthly data on the quantity of ethanol produced from FCI rice at the respective depots.
The sale of rice for ethanol production is limited to a total of 24 lakh metric tons (LMT). Old rice may be used where feasible.
According to the order, the Cycle 3 (C3) tender for supplying approximately 110 crore liters of ethanol during the 2024-25 Ethanol Supply Year (ESY) will be exclusively for ethanol produced using FCI rice.
For the sale of rice to State Governments, State Corporations, and Community Kitchens, the reserve price has been set at Rs 2,250 per quintal across India, without the need to participate in e-auctions.
The OMSS(D) Policy for 2024-25 will remain in effect until June 30, 2025.
Earlier, in August 2024, the government lifted a ban on rice sales for ethanol distilleries, which had been imposed in 2023. The government allowed the purchase of 23 lakh tonnes of rice from central pool grain stocks between August and October 2024, to be sold via e-auction under the OMSS. However, ethanol manufacturers did not purchase any rice, citing financial unviability.
The reduction in the rice price for ethanol production is expected to encourage higher ethanol production.
For the ongoing ESY 2024-25, the total ethanol allocation (Cycles 1 and 2) stands at around 930 crore liters.
Ethanol blending in petrol reached a record 18.2% in December 2024, with cumulative ethanol blending from November to December 2024 reaching 16.4%. This marks the highest monthly ethanol blending percentage to date.
According to the Ministry of Petroleum & Natural Gas (MoPNG), ethanol supplies under the Ethanol Blended Petrol (EBP) programme have increased significantly, from 38 crore liters in ESY 2013-14 to 707.4 crore liters in ESY 2023-24, achieving an average blending of 14.6% ethanol in petrol.
The government has set a target of 20% ethanol blending by ESY 2025-26 and is confident of achieving it. To meet this target, approximately 1,016 crore liters of ethanol will be needed, totaling 1,350 crore liters when including other uses.
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