Ethanol price paid by oil companies to sugar mills may be hiked

NEW DELHI: The government is likely to increase ethanol price that oil companies pay to sugar mills for buying ethanol extracted from molasses. It aims to encourage mills to divert excess cane and sugar to ethanol production to improve their liquidity and be able to pay cane arrears that rose to Rs 20,000 crore in July.

“Ethanol price will be hiked but only after increasing the minimum selling price of sugar. The fair and remunerative price (FRP) of sugarcane has already been increased by Rs 10 a quintal to Rs 285 a quintal,” said a senior food ministry official.

The food ministry has proposed to raise minimum selling price of sugar by Rs 2 to Rs 33 a kg.


“The extent of hike of ethanol price has not been decided yet. It may be increased by 5-7%,” another official said.

The government has fixed remunerative ex-mill price of ethanol derived from C-heavy molasses at Rs 43.75 a litre; from B-heavy molasses at Rs 54.27 and Rs 59.48 a litre for ethanol derived from sugarcane juice, sugar or sugar syrup for ethanol season 2019-20 (December-November). It has set mill wise target for producing 362 crore litres of ethanol for 2020-21.

The Centre has directed all sugar-producing states to utilise 85% of their existing capacity to produce ethanol.