Maharashtra ethanol plants face viability concerns over feedstock curbs, says Rajesh Tope
Former Maharashtra minister Rajesh Tope warned that restrictions on sugarcane juice and B-heavy molasses could hurt sugar-based ethanol distilleries. He urged dual-feed conversion, greater grain-based ethanol production and value addition to protect investments, cash flows and debt-servicing capacity.
Former Maharashtra minister Rajesh Tope on Monday raised concerns over the financial viability of sugar-based ethanol distilleries in the state if the government restricted production using direct sugarcane juice and B-heavy molasses.
Sugar factories had invested thousands of crores of rupees in ethanol projects in response to the Centre’s 20 per cent ethanol-blending policy, but any restriction on key feedstocks could leave the plants struggling to secure raw material and service bank loans, he said.
The concern comes as the government looks to expand the use of ethanol beyond the current 20 per cent blending level through flex-fuel vehicles. Advisor to Prime Minister Tarun Kapoor had said last week that the government was working towards allowing higher blending in such vehicles, while ethanol production capacity in the country had already surpassed requirements for the existing blending programme.
Kapoor had also said the industry would need to explore additional uses for ethanol to fully utilise the surplus capacity and had urged manufacturers to diversify into compressed biogas and other value-added by-products.
Tope said Maharashtra had around 179 operational distilleries, including 143 sugar- or molasses-based units and 36 grain-based projects. Investment in sugar industry-based distilleries in the state was estimated at Rs 16,000-20,000 crore.
Sugar industry-based distilleries had a combined annual ethanol production capacity of around 3.8 billion litres, while grain-based distilleries could produce around 1.04 billion litres annually, Tope said.
“Production may fall if the industry is forced to depend largely on C-heavy molasses. However, salaries, maintenance expenses, insurance, environmental compliance costs and bank instalments will continue,” he said.
Lower production coupled with unchanged fixed costs could increase the per-litre cost of ethanol and put pressure on the cash flow of sugar factories, particularly cooperative units already carrying substantial debt, he said.
Tope’s concerns came against the backdrop of pressure on Maharashtra’s sugar sector, where declining sugarcane production and shorter crushing seasons have affected the economics of mills. Experts have also ruled out diversion of sugar towards ethanol production as the main reason for the recent rise in sugar prices, pointing instead to lower cane output and trader stockpiling.
Tope said Maharashtra needed to balance three objectives in the 2026-27 season: maintaining sugar supplies and prices, ensuring adequate ethanol for the 20 per cent blending programme and protecting the financial viability of investments already made in distilleries.
He suggested converting existing sugar-based distilleries to dual-feed systems capable of using both sugar-based feedstock and grain. Maharashtra should also promote grain-based ethanol while ensuring a sustainable supply of raw material, he said.
Tope also called for greater value addition from by-products such as distillers dried grains with solubles, maize oil and carbon dioxide, besides producing biogas or compressed biogas from wastewater.
B-heavy and C-heavy molasses were intermediate and final by-products, respectively, generated during different stages of boiling and sugar extraction in sugarcane processing.
The Union government’s Ethanol Blended Petrol Programme is aimed at improving energy security, supporting farmers and reducing the environmental impact through greater use of domestically produced renewable fuel.
The government has said ethanol blending at stable, pre-agreed prices has helped insulate the fuel market from global crude price fluctuations and reduce the cost of petrol for consumers.
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Source : The Telegraph Online
