Ethanol push turns sweet for sugar mills

New Delhi:The indian sugar industry is gearing up to enter a new chapter for mass production, as the sector welcomes the latest announcement by central government on the modified scheme for extending interest subvention for those setting up grain-based along with molasses-based ethanol distilleries.

Abinash Verma, Director-General, Indian Sugar Mills Association (ISMA), told Bizz Buzz that the sugar industry is preparing to make a significant reduction on its sugar surplus.

"The central government incentivised 6 million tonnes (or 60 lakh tonnes) of exports in both 2020 and in 2021. That is one strategy on surplus sugar. The second strategy is to divert the surplus sugarcane itself towards production of ethanol and reduce the sugar production. The last season the quantum of molasses and (sugarcane) juice that we diverted to ethanol, allowed us to reduce our sugar production by 8 lakh tonnes. This year (2021), the offer that we have given to the oil marketing companies (OMCs) and the contract that we have signed, we are expecting that we will reduce sugar production to about 20 lakh tonnes by diverting the surplus into ethanol production," Verma said. "As we move forward into the next year, and the year thereafter, we will be looking at increasing the number from 20 lakh tonnes to up to 30 to 40 lakh steadily, and for this we are trying to develop required capacities. We are short of capacity. This programme was started in 2009, and in 2015 it was further pushed by the Prime Minister by incentivising ethanol pricing and production," he added. On Monday, ISMA had announced that the country's sugar output rose by 31 per cent to 142.70 lakh tonnes in the first three-and-a-half months of the 2020-21 marketing year that started in October 2020.

Speaking on the notification on modified scheme to enhance ethanol distillation capacity in the country, released by the Department of Food and Public Distribution, dated January 14, 2021, Verma said that the sugar industry will be able to produce significant amount of ethanol as against the target of 1,100 crore litres set by the government.

"We are regularly in touch, and in consultation, with the government. The government is looking at targeting 20 per cent blending (ethanol in petrol), for which they have estimated that OMCs would require about 1,100 crore litres (ethanol) in the next 7-8 years. So, if there is a requirement of 1,100 crore litres, and from the back calculations we looked at, there would be enough ethanol produced by the sugar sector, from sugarcane juice or molasses (by product of sugarcane)," the ISMA Director General said.

"They (govt) came to a conclusion that currently the sugar industry, as of 2020, supplied close to 200 crore litres (of ethanol), which was coming out of molasses and hardly any diversion of sugar. Plus, if the industry is going to divert all this 60 lakh tonnes of surplus sugar that we have, which we want to export, then that 60 lakh tonnes of sugar diverted to ethanol, the government believe that they can get another 350 to 360 crore litres from the it."

According to ISMA Director General, the central government is anticipating an estimate of 550 to 600 crore litres of ethanol through the current sugarcane production and sugar surplus.

"So in comparison to the requirement of 1,100 crore litres of ethanol, the government says that 600 crore litres can alone be contributed via sugar industry. And as for the remaining 500 crore litres, the government is looking to obtain it from other feedstock, which is why they have started incentivising not only the capacity from the sugar industry but also from grain based."

Verma said that provisions such as scope of expansion of the current distilleries and the fund allocated to invest into the same, the sugar mills industry can greatly benefit in the long run.

"As far as the sugar industry is concerned, this particular scheme (govt notification Jan 14), also allows new distilleries and the existing ones to expand, the one pertaining to sugar industry. This means that an existing distillery can set up additional unit or expand the current distilleries or if an existing sugar mill can introduce a new distillery in case they don't have one. The government is also allowing new distilleries to be set up in the grain-based sector but they are also saying that the existing sugar mills can make dual-feed distilleries i.e. not only the sugar mills can use molasses and sugarcane juice to make ethanol but they can also use grains or maize in their existing unit. For this, they would require an investment of Rs. 15 to 20 crores, they can take advantage of the interest subvension scheme." he said.

"As far as my industry is concerned, this new scheme allows us to also use alternative option of maize and grains by making a small investment at the feedstock level. I see this as a very positive move to increase ethanol production, since the sugar industry is being involved in the whole process," he said.