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In a major policy shift, the Government has scrapped rice supply at ₹20/kg to ethanol manufacturers and allowed them to buy at rates discovered in weekly auction. It has capped the quantity of rice from FCI for ethanol at 23 lakh tonnes (lt) by October 31. In a separate order, the government has also allowed sugar mills with distilleries to manufacture ethanol directly from sugarcane as well as B Heavy molasses, lifting the previous ban imposed last year.
The Food Ministry in a communication to all sugar mills said while lifting the restriction on ethanol from sugarcane juice/syrup and B Heavy molasses, which was imposed in December 2023, it will periodically review the diversion. Further, distilleries have been asked to adhere to the quantity of ethanol as contracted with oil marketing companies (OMCs) while selecting the feedstock.
In a separate order, the government has also asked distilleries to buy rice from Food Corporation of India (FCI) at the rate arrived in the weekly auction.
With riders
In an office memorandum, Director of Sugar in Food Ministry, Sangeet, has said ethanol distilleries may be allowed to participate in auction of FCI to private traders while ensuring compliance of a few conditions. He said, distilleries may be allowed to participate in e-auction and lift the rice during August-October period as per the final auction rate of rice every week.
Besides, FCI has been asked to allow lifting of rice based on allocation of ethanol to the concerned distilleries by OMCs using FCI rice as feedstock. “Maximum 23 lt rice may be allowed for lifting to ethanol distilleries,” he added.
“It is surprising that the government has allowed 23 lt quota for 2 months, whereas States have been seeking rice at concessional rates and they have been told to buy at ₹28/kg,” a former top official in the government said. In the last auction of rice, the average price was more than ₹30 against reserve price of ₹28 (excluding transport cost).
The government has sold about 35,000 tonnes of rice in first three auctions since it started this month, whereas about 1.96 lt was sold in 2023-24.
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