The Cabinet Committee on Economic Affairs has approved the revised the price of ethanol to be procured for blending with petrol under the Ethanol Blending Programme.

The price of ethanol derived from B heavy molasses (100 per cent sugarcane juice) has been hiked from ₹47.49 a litre to ₹52.43. The price of ethanol from C heavy molasses (partially sugarcane juice) has been marginally lowered from ₹43.70 a litre to ₹43.46. The revised price is applicable for the forthcoming sugar season 2018-19 during the ethanol supply year from December 1, 2018 to November 30, 2019.

At a press conference following the CCEA meeting, Minister for Petroleum and Natural Gas Dharmendra Pradhan said, “A new category of procurement is being introduced to incentivise sugar mills that divert all their sugarcane processing capacity for manufacturing ethanol. The mills will be offered ₹59.13 a litre for diverting 100 per cent sugarcane juice to production of ethanol.”

An official statement said, “Consistent surplus of sugar production is depressing prices... Consequently, sugarcane farmers’ dues have increased due to lower capability of sugar industry to pay the farmers…As the ex-mill price of sugar has increased from the earlier estimated price, there is a need to revise price of B heavy molasses and 100 per cent sugarcane juice for production of ethanol.”

Mills hail the move

Director General of Indian Sugar Manufacturers Association Abinash Verma said, “This price will compensate for the loss in revenue from the sugar sacrificed. Therefore, sugar mills will be incentivised to divert surplus ‘B’ heavy molasses, which is in abundance, for ethanol production.”

According to the Ministry directive, ethanol produced from sugar mills that produce only ethanol will be prioritised first, followed by ethanol from B heavy molasses or partial sugarcane juice, and then C heavy molasses, and then ethanol produced from damaged food grains or other sources.

The Ethanol Blended Petrol Programme was launched in 2003 on a pilot basis, and has been subsequently extended to the Notified 21 States and 4 Union Territories to promote the use of alternative and environment-friendly fuels. The government has been notifying the administered price of ethanol since 2014.

Verma said, “The current constraints on capacities to produce more ethanol will have to be overcome by investing in ethanol projects over 2-3 years. The government announced a policy in June to extend subsidised loans to sugar companies, for which over 150 applications have been submitted. The additional capacities over the next 2-3 years will help the country achieve 10-15 per cent ethanol blending with petrol, probably even before the 2022 target.”

Sugar stocks surge

The Cabinet nod lifted sugar stocks on the bourses; most of them were reeling till 2.30 p.m, but surged following the news.

The biggest gainer was Simbhaoli Sugars, which surged 17.8 per cent at ₹10.78 on the BSE, followed by Shree Renuka Sugars (11.30 per cent at ₹12.80) and Dhampur Sugar Mills (9.6 per cent at ₹97.70).

Dwarikesh Sugar Industries, Balrampur Chini Mills, Avadh Sugar & Energy, Ugar Sugar Works, Gayatri Sugars, Ravalgaon Sugar and Triveni Engineering gained 2-6 per cent.

The move will help reduce the growing sugar surplus and one can expect more diversion of sugarcane towards ethanol, which augurs well for the industry, said an analyst based out of Chennai.

Related Topics