State - run oil marketing companies will procure 120 crore litres of ethanol to reach the mandated target of 5 percent blending for petrol with bio - fuel by end of the sugarcane crop year in September 2016, Petroleum Minister Dharmendra Pradhan said on Wednesday.
"A memorandum of understanding has already been signed to procure 120 crore litres of ethanol. We'll meet the target of the 5 percent ethanol blending of petrol this year, " he told reporters here.
"For many years we were stuck at between 1 - 2 percent, but this year, we will achieve the target, " he said after inaugurating a national seminar on an ethanol roadmap for the country.
Pradhan said that some states have higher levels of blending, like Uttar Pradesh, which has a bio - fuels policy and where the blending levels are at around 9 - 10 percent, that is also helping sugarcane farmers in the state get better return on their crop.
In this connection, he said that storing the fuel was a major issue facing companies.
"PSUs (public sector units) are in the process of increasing the storage capacity for ethanol, " he said.
"This year we have also started procuring bio - diesel. Out of 85 crore litres that was tendered for procurement, 4 crore litres has come in already. In the next step, we want farmers to produce ethanol from different feedstock like wheat straw, rice straw, corn straw and others, " Pradhan added.
He said an Automotive Research Association of India study has shown that blending can be increased up to 15 - 20 percent for ethanol in petrol, as well as bio - diesel in regular diesel, without major changes to existing car engines.
"We are talking to various bulk purchasers like the railways, defence and state transport departments towards boosting use of bio - fuel, " he said.
"For agricultural water pumps, the blending can even be 100 percent of bio - diesel, " he added.
To boost the ethanol blending programme (EBP) started in 2003, and as a measure of relief to struggling sugar mills, the NDA government, in December 2014, fixed a minimum support price for ethanol in a bandwith of Rs. 48. 50 to Rs. 49. 50 per litre.
Inaugurating the seminar, Pradhan said that given India's current growth trajectory, the country's crude oil imports are estimated to rise to 550 million tonnes by 2040 and increasing use of bio - fuels will help reduce the import dependence as well as benefit the farmers.
"The creation of a second generation ethanol from other biomass will allow us to gave the farmer a better price for agricultural residue that is being burnt today, adding to pollution, " he said.
"To successfully commercialise the new bio - fuel technology, we need various departments to be coordinated. . agriculture, foods and food processing, micro, small and medium industries, finance and even rural development, " the minister added.