The “sudden” ban on the use of sugarcane juice for ethanol will have an adverse impact on at least 33 sugar mills which have created standalone distilleries to process sugarcane for making ethanol. The sector’s ₹15,000 crore investment made over the last three years is at risk now, according to Indian Sugar Mills’ Association (ISMA).

Briefing media before the annual general meeting of ISMA, outgoing president of the industry body Aditya Jhunjhunwala said there could be a delay in payments to sugarcane farmers as revenue from ethanol (cleared by oil marketing companies in three weeks), helps mills to pay cane dues whereas after 4-5 months of cane crushing, sugar is sold throughout the year and revenue generation is not instant.

The Centre recently banned use of sugarcane juice or syrup for ethanol and allowed only B-heavy molasses to be used as feedstock in view of a likely drop in sugar production during the 2023-24 season (October-September).

Price hike demand

ISMA has sought an increase in prices of ethanol made from B-heavy and C-heavy molasses, a by-product of sugar, to improve the financial health of millers. He said ISMA has urged the Centre to increase the price of ethanol made from B-heavy molasses to ₹64 per litre from current ₹60.73 per litre and for C-heavy molasses to ₹59 per litre from ₹49.41 per litre.

“The sudden ban on use of sugarcane juice/syrup for ethanol in 2023-24 supply year with immediate effect, is a big deterrent for the sugar industry,” Jhunjhunwala said. The ban has put the industry in a difficult situation, which needs to be reconsidered.

“With the lowest sugar price in the world, no sugar export this year and ban on ethanol production from sugarcane juice, industry is facing difficulties to uphold its promise of timely payment to farmers,” he said.

19 lakh tonne surplus

Releasing the sugar baslance sheet, ISMA said India exported 64 lt of sugar in the 2022-23 marketing year and achieved 12 per cent blending of ethanol with petrol in 2022-23 supply year (December to October). From 2023-24, ethanol supply year has been changed to November-October whereas earlier it was December-November.

Jhunjhunwala said the total sugar production in 2023-24 is expected to be 325 lt (without diversion to ethanol) while domestic consumption is seen at 285 lt. He said as the government is likely to allow diversion of 17 lt of sugar for ethanol in 2023-24 supply year, there could be about 19 lt surplus factoring a carry forward requirement of 60 lt for next year. “There is a scope for diversion of another 17-20 lt of sugar for ethanol,” he said.

The ethanol production capacity has increased to 763 crore litres from 283 crore litres in last three years, ISMA said.

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