Increase in ethanol procurement price by OMCs welcomed
In a big relief to the sugar industry in the election year, the Oil Marketing Companies (OMCs) have announced a Rs 6.87 per litre increase in the procurement price for ethanol produced from C Heavy Molasses for the 2023-24 season that started in November. The hike in price will immensely boost the finances of the cane-based ethanol makers.
Indian Sugar & Bio-energy Manufacturers Association (ISMA) has welcomed the decision. In a statement ISMA said, “The industry appreciates the incentive of Rs. 6.87 per litre on supply of ethanol from C Heavy Molasses that takes the price to 56.28/ litre.”
The ISMA demanded further hike in the price to help the industry navigate better in these uncertain times and ensure timely cane price payments, mitigation of losses and help augment ethanol production. Not to mention, the high interests that the industry is paying for investments in the increase of ethanol production capacity that is now not being utilised fully.
ISMA also reiterated its demand for the ban on export of molasses with immediate effect.
The central government has been implementing Ethanol Blended with Petrol (EBP) Programme throughout the country wherein OMCs sell petrol blended with ethanol. Under the EBP Programme, the government has fixed the target of 20% blending of ethanol with petrol by 2025.
For this, about 1,700 crore liters of ethanol producing capacity is required to be in place by 2025 considering the plant operates at 80% efficiency.
In October, 2023, the OMCs had floated tender for procurement of 825 crore litres of ethanol for 2023-24, allocating 265 crore litres from sugar-based feedstocks, including 135 crore litres from sugarcane juice/syrup and 130 crore litres from B-heavy molasses.
According to the experts, around 157 crore litres have been reallocated, including around 42 crore litres from SCJ and 115 crore litres from BHM. (This translates to 10 LMT sugar diversion for BHM and around 7 LMT for SCJ).
As on November2023, the ethanol production capacity in the country is about 1,380 crore litres out of which about 875 crore litres is molasses based and about 505 crore litres is grain based.
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