State-owned refineries to set up ethanol plants at a cost of Rs 7,000 crore

State-run oil marketing companies Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation have been given the mandate to set up around 12 ethanol manufacturing plants as part of a road map to meet the 20% ethanol blending target by 2025.

Tarun Kapoor, secretary, ministry of petroleum and natural gas, told Financial Express that the three oil majors have been asked to set up around 150 crore litres per annum ethanol manufacturing capacity out of 1,000 crore litres that will be required to meet the target by 2025. “This will entail an investment of Rs 5,000 crore to Rs 7,000 crore,” Kapoor said.

The companies will also be setting up storage facilities for ethanol procured from other manufacturers, as the final blending is done by refiners and the oil marketing companies. The investment will likely be funded by the companies themselves, said a senior PSU official.

India has already achieved a blending percentage of 5% in FY2021. This year, it is estimated that India will cross 8% blending average. “We hope to procure about 330-340 crore litres this year against 173 crore litres last year,” Kapoor had said in a webinar recently.

At present, petrol is being sold with 10% ethanol, known as E10 while the target is to reach 20% blend (E20) by 2025. “Next year, all the petrol sold in the country would E10 and then gradually we will move on to higher blends,” Kapoor said.

The government has also iterated the need for change in marketing infrastructure by setting up additional storage tanks for ethanol at marketing terminals and depots, need for ethanol compliant dispensing units. Besides, having additional underground tank, pipes, hoses and dispensing units for ethanol at the retail outlets. Banks, however, have been wary of funding the sugar mills in the past due to their weak balance sheets. With the addition of rice, maize and other grains, the availability of ethanol would become lot easier.

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