India’s GACL, GAIL plan 2G ethanol joint venture

MUMBAI (ICIS)–State-owned firms Gujarat Alkalies and Chemicals Ltd (GACL) and Gas Authority of India Ltd (GAIL) plan to set up a joint venture project to produce 500,000 litres/day ethanol.

The second generation (2G) plant, which will use feedstock like corn or rice husk, will be set up at a cost of Rs10bn ($132m) in western Gujarat state, the state government of Gujarat said in a statement.

This new plant is expected to help India achieve its target of increasing ethanol blending in petrol to 20% by 2025.

To increase ethanol availability by 2025, the government has mandated state-owned oil and gas firms to set up second generation (2G) ethanol plants across the country, which will use grain and agricultural waste as feedstock to produce ethanol.

India will need to produce more than 12bn litres (4.2bn tonnes) of ethanol to achieve its target of blending 20% ethanol in fuel, and to meet the requirements of the chemical and other sectors, as per GAIL’s assessment.

Currently, India’s ethanol capacity stands at 6bn litres/year and it is primarily produced using sugarcane molasses and juice.

The government expects to achieve 10% ethanol blending in petrol in the current ethanol supply year (ESY) 2021-22. The current ESY runs from 1 December 2021 to 30 November 2022.

Indian ethanol producers will be required to supply around 4.6bn litres of ethanol to help the government achieve this target.

In the 2020-21 ESY, India managed to achieve an average ethanol blending of 8.1%, as per a statement from the Indian Sugar Mills Association (ISMA) on 20 December.

To make ethanol production more lucrative, the government recently increased procurement price of ethanol from sugarcane feedstock by around Rs1.50/litre.

For 2021-22, the government has fixed the price of ethanol derived from high-yielding B-heavy molasses at Rs59.08/litre, and Rs46.66/litre for ethanol from C-heavy molasses.

Ethanol made from pure cane juice and sugar syrup will now be priced at Rs 63.45/litre.

The goods and service tax (GST) on ethanol has also been brought down to 5% from 18%.

The government also plans to issue an advisory to auto manufacturers to increase their production of vehicles with flex fuel engines over the next one year, Nitin Gadkari, Minister of Road Transport said as per media reports.

This will ensure increased use of ethanol blended fuel and will help the government achieve its target, Gadkari added.

($1=Rs76.67)

Focus article by Priya Jestin