A record 140 crore litres of ethanol will be blended with petrol this year as the government pushes for use of agri-extracts to cut dependence on imports to meet oil needs.

The government has allowed blending of up to 10 per cent ethanol extracted from sugarcane, in petrol but supplies have remained a concern and targets never achieved.

"With supply of 66.5 crore litres of ethanol in 2016-17, we had 2.1 per cent blending in petrol," Oil Minister Dharmendra Pradhan said at the European Union-India Conference on Advanced Biofuels.

The availability in the ethanol supply year 2016-17 (December 2016 to November 2017) was lower due as drought in Maharashtra and Karnataka hit cane, molasses availability.

For the 2017-18 supply year, over 139.5 crore litres of ethanol has been assured. "This will help us achieve 4 per cent blending," he said. This is highest ever ethanol procured for blending in petrol.

Ethanol supply was 38 crore litres during supply year 2013-14, which improved to 111 crore litres in 2015-16.

Pradhan said use of bio-fuels will help achieve the target of reducing oil imports by 10 per cent by 2022.

India currently imports 80 per cent of its oil needs. It imported 77 per cent in 2015-16 when Prime Minister Narendra Modi gave a call for cutting import dependence by 10 per cent by 2022.

To augment supplies, non-molasses based ethanol as well as that from crop residue and municipal solid waste is being encouraged, Pradhan said adding for blending in diesel, non-edible oil from plants like Jatropha would be used.

The government will very soon come out with a new National Biofuel Policy that will provide for feedstocks that can be used for extracting oils for blending in petrol and diesel, he said.

State-owned oil companies will guarantee offtake of biofuels, he said.

Also, a dozen bio-refineries are being set up to produce second-generation (2G) ethanol. "We are also setting up commercial plants based on advanced biofuels," he said.

"To attract investments from other potential investors, oil marketing companies have agreed to provide guaranteed offtake of 2G ethanol from suppliers for a period of 15 years," he said adding oil PSUs are also exploring possibilities of commercial production of bio-CNG from municipal solid waste, sewage water and crop residue.

Ethanol has higher octane than petrol, burns slowly and completely. Its blending with petrol helps in reducing emissions. The quantity to blended helps in substituting imports.