Bid & Tender
TEI - Energy Outlook

India’s ‘Swadeshi’ Fuel Blend

Amid Indian Government’s push for greater adoption and utilization of cleaner and greener fuel, PM Modi launched the E-100 pilot project for production and distribution of ethanol across the country and is committed to meeting its target of 20% ethanol blending in petrol by 2025.

The government has undertaken several measures which has enabled improvement in ethanol blending from average 1.53% during Ethanol Supply Year (ESY) 2013-14 to 7.93% during ongoing ESY 2020-21, says Ministry of Petroleum & Natural Gas.

Ethanol is less polluting, and offers equivalent efficiency at a lower cost than petrol by raising the octane level. Greater use of Ethanol-Petrol-Blending will reduce dependence on fossil fuel and consequently reduce import bill by $5 billion a year. India’s net petroleum import bill stood at $551 billion in FY 2020-21.

Ethanol or ethyl alcohol is a by-product of sugar mills, although it can also be produced from grains or cane juice. Increasing the use of alcohol in gasoline is profitable for the sugar sector that have historically struggled with a surplus production of sugar as well as outstanding cane dues from states. By 2025 about 6 million tonnes of sugar is targeted to be diverted to ethanol.

To achieve 20% blending of gasoline target, the government is encouraging sugar mills and distilleries to enhance their distillation capacities. Investment of Rs. 410 billion is expected to meet the requirement.

The Hindustan Petroleum Corporation Limited (HPCL), Maharatna PSU, plans to invest Rs. 4 billion on a 125,000 litre/day grain-based ethanol plant at Una in the Himachal Pradesh state in northern India, with plant site of 70 acres to be provided by the state government.

GAIL Limited, a government owned natural gas corporation, is planning a bigger grain-based ethanol plant with a 500,000 litres/day capacity, in joint venture with private partners. Bharat Petroleum Corp Limited (BPCL), another leading oil and gas companies in India, also plans to set up an ethanol plant at a cost of Rs. 10 billion in south eastern Telangana state. The proposed plant will have a capacity of 500,000 litres/day and will use grain as feedstock.

By 2025, the government expects the sugar industry to produce 7 billion litres of ethanol or 58% of the total output required, whereas other ethanol plants are expected to produce the remaining 5 billion litres.

Pallavi Agrawal