Maharashtra: Restrictions on ethanol production impacts sugar mills, experts say
Sangli: The government’s new tender reportedly prohibiting the purchase of ethanol produced from sugarcane juice, syrup and B-heavy molasses, allowing procurement only from C-heavy molasses is expected to affect sugar factories in Maharashtra, increase sugar production and limit the scope for a rise in sugar prices, Sakal reported.
The restrictions come amid drought concerns in the state and indications that sugarcane cultivation and molasses-based projects may need to be regulated. With less sugarcane being diverted for ethanol production, factories will have to use more of it to produce sugar. This is likely to increase sugar supplies in the market and keep prices under control, benefiting consumers.
However, the decision could reduce an important source of income for sugar factories. Ethanol sales have helped factories generate additional revenue, and a decline in these earnings could worsen their financial position. Factories may also face greater difficulties in arranging funds before the start of the crushing season.
In Maharashtra, 123 sugar factories have distilleries along with 32 independent distillery projects, with a combined annual ethanol production capacity of 375 crore litres. According to the report, the restrictions could leave 65 to 70 per cent of this capacity unused or operating at reduced levels.
The state’s investment in these distillery projects is estimated at Rs 35,000 crore to Rs 40,000 crore. Underutilisation of this capacity could affect sugar factories as well as the banks that financed these projects.
R. D. Mahuli, Executive Director, Rajarambapu Sugar Industries Group, said, “The central government’s decision will cost the sugar industry in Maharashtra Rs 7,000 crore this year. The country needs 1,100 crore litres of ethanol. Out of this, 500 crore litres of ethanol is expected to be produced from corn. At the same time, the subsidy on ethanol from corn has been reduced by Rs 2.79 per litre. Due to the drought situation, corn production will also decrease. The government should increase the price of ‘C-heavy’ corn ethanol from Rs 57.97 to Rs 65-70 per litre, and also reduce restrictions. Such sudden policy changes are creating a dilemma. Sugarcane rate protest leaders should think about how much to intensify the agitation in this situation.”
In recent years, the state government has also begun giving greater priority to ethanol projects that use maize and other grains instead of sugarcane. However, increased demand for maize and sorghum for ethanol production could push up their prices and affect the poultry industry.
Shekhar Gaikwad, Former Sugar Commissioner, said, “Oil companies have a constant demand of 1100 crore litres of ethanol. The government is trying to reduce the demand from sugarcane by increasing the demand for ethanol from maize and sorghum. Due to the growing opposition, the government’s policy is to postpone the decision to blend more than 20 percent ethanol. The aim behind it is also to control the price of sugar in the market. However, it is certain that due to this, the sugar industry has gone into ‘reverse gear’.
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Source : ChiniMandi
