The Central government has allocated 78,000 tonnes of rice procured for food security purposes to be diverted to ethanol production instead this year, at a subsidised rate of ₹20 a kg, Food Secretary Sudhanshu Pandey said on Tuesday. However, he insisted that the share of rice in ethanol production was “miniscule and transitory”, emphasising that maize would form the primary feedstock for grain-based ethanol production instead.
This is part of the government’s plan to double distilling capacities by 2025, partly by encouraging an increase in the share of grain-based ethanol production from the current focus on molasses-based production. Earlier this month, Prime Minister Narendra Modi presented a road map advancing the target date for achieving 20% blending of ethanol in petrol by five years to 2025. The last two years have seen blending levels of around 5%, which is likely to jump to 8.5% in the current year, according to a Ministry statement.
Mr. Pandey told journalists that the Centre was targeting an ethanol production of 1,500 crore litres by 2025, out of which almost half, 740 crore litres, would be from grain-based distilleries, with the remainder coming from sugar-based distilleries. Currently, about a third of the 710 crore litre ethanol production capacity comes from grains, but most of it is already committed for alcohol-based products rather than for fuel blending. Only 38 crore litres of grain-based ethanol is used for fuel.
‘A stabilising measure’
This year, the Centre had committed for about three lakh tonnes of rice procured by the Food Corporation of India for ethanol production. However, only 78,000 tonnes would be lifted by six distilleries, said Mr. Pandey. The use of rice was necessary as a stabilising measure in a transitory phase until maize production could be sufficiently increased. Maize produced a higher output of fuel at a lower cost, also leaving a byproduct, which is used for poultry and cattle feed. Around 100 crore litre grain-based distillery capacity was being created, he stated.
The Food Secretary noted that the FCI had 30 lakh metric tonnes of rice in its warehouses, and the ongoing and upcoming procurement was expected to ramp up that stock even further, dismissing concerns that a grain procured for food security purposes was being diverted for ethanol production. The Centre has been distributing additional free grain to ration card holders as COVID-19 relief, but has refused to universalise its public distribution system during the pandemic.
Although the FCI’s economic cost for procured rice was Rs. 37 a kg, it offered the grain at a subsidised cost of ₹20 to both ethanol producers as well as to the State governments and civil society groups looking to distribute food to vulnerable communities. Mr. Pandey said the subsidy provided to ethanol manufacturers would be accounted for separately from the Centre’s food subsidy.
Asked whether the consumer would benefit from cheaper green fuel as a result of the many subsidies the Centre was giving for the ethanol blending programme, he observed it was a taxation decision to be taken by the government at a later time.
The use of ethanol blended petrol was expected to create benefits by reducing air pollution, cutting the oil import bill, supporting sugarcane, maize and rice farmers as well as sugar mills, and increasing investment and job creation in rural areas.
