As per an official statement, the CCEA decided to increase prices of ethanol derived from "C heavy" molasses to Rs 43.75 per litre from the 43.36 per litre.
The prices of ethanol derived from "B heavy" molasses would also be increased from Rs 52.43 to Rs 54.27 per litre.
The CCEA also decided that the price of ethanol from the sugarcane juice, sugar and sugar syrup route would be fixed at Rs 59.48 per litre.
"Additionally, GST and transportation charges will also be payable. OMCs (oil marketing companies) have been advised to fix realistic transportation charges so that long distance transportation of ethanol is not disincentivised," the statement said.
"OMCs are advised to continue according priority of ethanol from 1) sugarcane juice/sugar/sugar syrup, 2) B heavy molasses 3) C heavy molasses and 4) damaged food grains/other sources, in that order," it said.
All distilleries would be able to take benefit of the scheme and a large number of them are expected to supply ethanol for the Ethanol Blended Petrol (EBP) Programme. Remunerative price to ethanol suppliers would help in reduction of cane farmers' arrears, in the process contributing to minimising difficulty of sugarcane farmers, the statement said.
The government has been implementing EBP Programme wherein OMCs sell petrol blended with ethanol up to 10 per cent. This programme has been extended to whole of India except the Union Territories of Andaman Nicobar and Lakshadweep islands with effect from April 1 this year to promote the use of alternative and environment-friendly fuels.
The government intervention also seeks to reduce import dependence for energy requirements and give a boost to the agriculture sector.
Consistent surplus of sugar production is depressing sugar price. Consequently, sugarcane farmers' dues have increased due to lower capability of sugar industry to pay them.
With a view to limit sugar production in the country and to increase domestic production of ethanol, the government has taken multiple steps including allowing diversion of "B heavy" molasses and sugarcane juice for ethanol production.
Commenting on the hike in ethanol prices, Abinash Verma, Director General, Indian Sugar Mills Association (ISMA), said: "Government's decision to increase ethanol price once again, with special emphasis and a higher increase for ethanol made from B-heavy molasses, confirms the government's commitment towards encouraging more diversion of the surplus sugarcane/sugar into ethanol.
"The second very important decision of allowing a single premium price for the ethanol made from partial or 100 per cent sugarcane juice is another big and positive step in this direction."
The decisions would help in further increasing the ethanol blend levels from the current 6 per cent average levels across the country, he added.
Last week, in a bid to reduce the high stock of sugar in the country, the CCEA had approved a sugar export subsidy for the 2019-20 sugar season to export 60 lakh metric tonne (MT) of sugar, at a cost of Rs 6,268 crore to the government exchequer.
( With inputs from IANS )