The Grain Ethanol Manufacturers Association (GEMA) has sent a letter to Union Minister for Petroleum and Natural Gas, Hardeep Singh Puri, requesting a waiver of penalties for the ethanol supply shortfall during the Ethanol Supply Year (ESY) 2023-24. GEMA highlighted the challenges faced by Dedicated Grain Ethanol Plants (DEPs), which have struggled to fulfill their ethanol supply commitments to Oil Marketing Companies (OMCs) due to unforeseen disruptions in feedstock availability.

In its letter, GEMA acknowledged the significant growth of the grain ethanol industry in recent years. The sector’s capacity has increased from 30 crore liters to 800 crore liters in just four years, spurred by the government’s push for a 20% ethanol blending target by 2025 under the Ethanol Blended Petrol (EBP) Programme. GEMA noted that this expansion represents one of the fastest greenfield developments in any industry segment in India. However, the association also emphasized that the industry is still in its early stages, with many producers being young entrepreneurs who have made substantial investments in establishing DEPs.

A major challenge cited by GEMA has been the unexpected withdrawal of surplus grain by the Food Corporation of India (FCI). The FCI had previously assured the availability of surplus grain in the event of feedstock shortages, but the sudden withdrawal has created significant uncertainty for the industry.

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According to GEMA’s estimates, the industry had contracted to supply 445-450 crore liters of ethanol to OMCs for ESY 2023-24. However, despite their best efforts and a 15-day grace period to complete the deliveries, the expected supply is now estimated to be around 390-400 crore liters. This would result in a shortfall of approximately 50 crore liters, attracting a penalty of Rs 110 crores.

In light of these challenges, GEMA^[1] has requested that the penalties for this shortfall be waived, given the unforeseen circumstances and the industry’s continued commitment to supporting the government’s ethanol blending objectives.

The letter urges Minister Puri to intervene and provide the necessary support to ensure the continued growth and stability of the grain ethanol industry.

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