Excess sugarcane utilization for ethanol production to boost sugar industry in India

The government has set 10% blending target for mixing ethanol with petrol by 2022 and 20% blending target by 2030.

The Central government has said that it is focusing on utilization of excess sugarcane for ethanol production to improve viability of the sugar industry in the country which will in turn enable sugar mills to make timely payment of cane dues of farmers. Ethanol is a green fuel and its blending with petrol also saves the country’s foreign exchange, the Consumer Affairs, Food and Public Distribution Ministry stated on Saturday.

The government has set 10 per cent blending target for mixing ethanol with petrol by 2022 and 20 per cent blending target by 2030. In view of it, the ministry said that the government has taken several measures to achieve the target.

Also, ways and means to increase the supply of ethanol to oil marketing companies (OMCs) was discussed at a meeting on Friday to achieve the government’s objective to increase blending percentage in petrol. The meeting was co-chaired by Secretary (Food & Public Distribution), Secretary (MoPNG) and Secretary (DFS). It was held with the representatives of leading banks and OMCs, cane commissioners of major sugar producing states and sugar industry associations, the ministry said in a release.

During the meeting, it was agreed that as producers of ethanol (sugar mills), buyers of ethanol (OMCs) and the lenders (banks) are willing to enter into a tri-partite agreement (TPA) about producing, buying and paying for the ethanol through an escrow account etc., the banks can consider giving loans to sugar mills even with weak balance sheets. This would facilitate mills to avail loans from banks to set up new distilleries or to expand their existing distilleries, thereby enhancing the overall distillation capacity in the country and thus would help in achieving the blending target under Ethanol Blended with Petrol programme. It was assured by the states and industry that efforts would be made to increase supply of ethanol in the current as well as in ensuing ethanol supply years, the ministry added.

Ethanol supply in 2018-19

The ministry stated that about 189 crore ltrs of ethanol was supplied by sugar mills and grain based distilleries to OMCs, thereby achieving five per cent blending target and in current ethanol supply year 2019-20, efforts are being made to supply 190-200 crore ltrs of ethanol for blending with petrol to achieve 5.6 per cent blending.

The 10 per cent blending target for mixing ethanol with petrol by 2022 and 20 per cent blending target by 2030.

To achieve the objective, the Department of Food and Public Distribution is regularly holding meetings with Department of Financial Services; Ministry of Petroleum & Natural Gas; Ministry of Environment, Forest and Climate Change; state governments; representatives from Sugar Industry and Banks, the ministry stated.

Measures to achieve the blending targets

The government is encouraging sugar mills and molasses based standalone distilleries to enhance their ethanol distillation capacity. Soft loans of about Rs.18,600 crore are being extended through banks to 362 projects of 600 crore litre capacity for enhancement and augmentation of ethanol production capacity, for which an interest subvention of about Rs.4,045 crore for five years is being borne by the government. So far, loans have been sanctioned to 64 project proponents and  completion of these projects would increase ethanol distillation capacity by 165 crore ltrs in another two years. Thus the ethanol distillation capacity in the country would increase from 426 crore ltrs per annum to about 590 crore ltrs per annum by 2022, the ministry explained.

To encourage sugar mills to divert excess sugarcane to produce ethanol for blending with petrol

1. The government has allowed production of ethanol from B-Heavy Molasses, sugarcane juice, sugar syrup and sugar

2. It has also fixed the remunerative ex-mill price of ethanol derived from these feed-stocks.

3. The statewise targets for ethanol manufacture have also been fixed.

4. Sugar mills and distilleries have been advised to utilize at least 85 per cent of their existing installed capacity to produce ethanol.

5. Sugar mills having distillation capacity have been advised to divert B-heavy molasses and sugar syrup for producing ethanol to utilize their capacity to maximum extent

6. Those sugar mills which do not have distillation capacity should produce B-Heavy molasses and should tie up with distilleries which can produce ethanol from B-Heavy molasses.

7. States have also been requested to ensure smooth movement of molasses & ethanol.

First Published:Aug. 22, 2020, 1:49 p.m.