The Indian government has ordered sugar mills and distilleries to avoid using sugarcane juice or sugar syrup for ethanol production in the supply year 2023-24 (December 2023 to November 2024) to ensure availability of sugar for domestic consumption.
The Ministry of Consumer Affairs, Food and Public Distribution said in its order on Thursday that supply of ethanol from B-heavy molasses will continue under existing offers received by oil marketing companies (OMCs). B-heavy molasses is the syrup leftover in the second molasses; the first one is left after sugar is crystallised out.
Permitting B-heavy molasses is also part of the Centre’s move to allow OMCs to accept ethanol already produced, or being produced directly from sugarcane juice/syrup, sources said.
“If the restriction is imposed, about 3 million tonnes (mt) of additional sugar will be available in the domestic market, which may flare up the estimated surplus of the season to 4-5 mt over and above domestic demand and carry-forward stock,” said an industry official.
After assessing the demand-supply situation, the committee of ministers decided to focus on sugar production this year, Reuters reported from unnamed sources.
Policy tweak vs ban
Many industry officials suggested that the ethanol price policy may be tweaked instead of imposing a blanket restriction, as sugar mills can choose the best profitable means to produce ethanol from sugarcane juice/syrup or B-heavy molasses or C-heavy molasses.
For ESY 2022–23, the OMCs floated a tender for 599.7 crore litres of ethanol, against which letters of intent (LoIs) were issued for 564.45 crore litres as of August 2023. According to industry sources, mills were awarded orders to produce about 270 crore litres from sugarcane-based raw material (including syrup and molasses) and about 290 crore litres from grain-based source (including dual-feed based sugar plants) in the first round (cycle 1) of supply tender.
Though there is speculation over allowing production of ethanol only from C-heavy molasses, this is unlikely as the government is also wary of surplus sugar production at a time when global prices are low amid a projected good crop in Brazil.
In C-heavy molasses there is hardly any sugar content and ethanol from it commands the lowest price. The OMCs are yet to announce ethanol prices for the 2023-24 season (November to October) and distilleries have agreed to supply on the condition that the difference (from last season’s rates) would be paid.
Ethanol price varies according to the raw material used. In the 2022-23 season (December to October), ethanol from direct sugarcane juice/syrup was priced Rs 65.73/litre; it was Rs 60.73/litre for B-heavy molasses and Rs 49.41/litre for C-heavy molasses.
Similarly, the rates were Rs 66.07/litre for maize, Rs 64/litre for damaged rice, Rs 58.50/litre for FCI’s subsidised rice supplied at Rs 20/kg (since discontinued).
“The government needs to tread cautiously as any unreasonable surplus of sugar may lead to offloading with no takers in the global market due to the price issue,” a sugar exporter said. However, as National Cooperative Export Ltd (NCEL) has been appointed the canalising agency for sugar export, with permit to ship 25,000 tonnes to Nepal and Bhutan, a similar arrangement can be done for other countries, the exporter said.
Web Title – India bans diversion of sugarcane juice, syrup for ethanol production