State-owned fuel retailers have offered Rs 6.87 per litre incentive on ethanol made from C-heavy molasses to shore up supplies.
"In order to maximise ethanol production from C-molasses route and improve the overall availability of ethanol for ethanol blended petrol programme, public sector oil marketing companies announce an incentive of Rs 6.87 per litre for ethanol from C-heavy molasses," the oil ministry said in a post on X on Friday.
C molasses is a byproduct of sugar factories and its utilisation for ethanol production is an effective way to promote green economy, it said.
Oil firms are mixing 12 per cent ethanol in petrol as part of a government programme to cut consumption of fossil fuel and import dependence.
Oil marketing companies Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) announced the incentive.
The companies said the decision was taken to promote the supply of ethanol from C-heavy molasses.
The incentive amount will be payable over and above the previous Ethanol Supply Year (ESY) procurement price of Rs 49.41 per litre.
The government will decide the prices of ethanol produced from B-heavy molasses and juice in a few days. The government can offer additional ethanol from C-heavy against lapsed allocations of juice or B-heavy ethanol.
The government might also convert the existing revised allocations of juice or B-heavy ethanol for supply as C-heavy.
The incentive will not be applicable on quantities supplied in ESY 2023-24 against allocations/purchase orders of ESY 2022-23.