The grain ethanol manufacturers have sought a revision in current ethanol rate ₹58.50/litre which was based on when the Food Corporation of India (FCI) was selling rice at ₹20/kg. The revised price should be ₹70.71/litre after the government announced the FCI rice would be sold at ₹28/kg for the distilleries, according to Grain Ethanol Manufacturers Association (GEMA).

“We have requested the petroleum ministry for a revision in the ethanol price after the FCI rice price has been fixed,” said C K Jain, president of GEMA.

The Food Ministry on January 7 informed FCI that ethanol manufacturers should be sold rice at a fixed rate of ₹2800/quintal, and no additional transport cost should be added. Prior to the decision, the food ministry in August 2024 had allowed distilleries to buy rice from FCI at average auction price at the weekly e-auction taking place and also allocated 23 lakh tonnes (lt) until October 2024.

However, there was no policy announcement (until the latest one) about FCI rice since ethanol year 2024-25 began from November. The government is also yet to make an announcement on revised ethanol prices for other feedstock.

As reported by business ine earlier, the government is considering to raise the ethanol price between Rs 1.50/litre and Rs 1.70/litre for the current ethanol supply year (ESY). However, the increase in price is likely to be confined only to ethanol made from sugarcane juice/syrup and B-Heavy Molasses and rates of ethanol made from maize, damaged foodgrains (rice) and C-Heavy molasses may remain unchanged.

Until ESY 2023-24, the ethanol prices were ₹71.86/litre if made from maize, ₹65.61/litre from sugarcane juice/syrup, ₹64/litre from damaged foodgrain (rice), ₹60.73/litre when made from B-Heavy Molasses (CHM) and ₹56.28/litre from C-Heavy Molasses (CHM).

Sources said that when the last price of ₹58.50/litre was fixed for FCI rice, it was actually based on a sale price of rice calculated at ₹22.50/kg. However, due to a push required for ethanol as felt by top leaders, the rice price was lowered but the ethanol price was allowed to remain unchanged, the sources said.

“Out of 23 lt allocated for ethanol, no rice was lifted. Similarly, the lifting of rice from FCI at ₹28/kg will depend on the ethanol price. If the government maintains the price at ₹58.50/litre, it has to reduce the FCI’s selling rate to ₹22.50/kg to make the ethanol processing viable and help achieve the 18 per cent blending target in current supply year,” said an official of a dual-feed (grain and sugarcane) distillery in Uttar Pradesh.