We anticipate favourable policy developments on ethanol pricing, feedstock availability: Tarun Sawhney
Industry leaders expect increased sugar diversion for ethanol production in the upcoming Ethanol Supply Year, driven by favorable government policies on ethanol pricing and feedstock. Tarun Sawhney of Triveni Engineering forecasts a slight increase in sugarcane sowing to 57.68 lakh hectares in 2024, with sugar production estimated at 34.5 million tonnes, of which 4 million tonnes will be used for ethanol. This shift is predicted to boost revenues for integrated sugar mills and support sugar exports of around 2 million tonnes. The government aims for a 20% ethanol blending target by 2025, requiring significant increases in production capacity and ethanol supply.
Industry leaders anticipate an increase in sugar diversion for ethanol production in the upcoming Ethanol Supply Year, alongside favorable policy announcements from the government concerning ethanol pricing and feedstock availability.
Tarun Sawhney, Vice Chairman & Managing Director of Triveni Engineering and Industries, commented on the production outlook, stating, “As per the recent estimates, the sugarcane sowing reached 57.68 lakh hectares in 2024 which is slightly higher than the sowing of last year at 57.05 lakh hectares. It is estimated that the gross sugar production will be 34.5 million tonnes in Sugar Season 2024-25 with around 4 million tonnes will go for ethanol production. This augurs well for the sugar industry as this shift will not only reduce sugar output, it is expected to enhance revenues for integrated sugar mills through healthy domestic prices and increased distillery volumes. With the healthy sugar inventory in the country, the industry hopes that the Government will also permit sugar exports of around 2 million tonnes. This further ensures liquidity at sugar mills boosting timely sugarcane payments to farmers.”
“The cumulative ethanol blending during November 2023 to June 2024 was 13% across India as per the recent Government reports. The sector’s ability to stay profitable and adapt to policy changes will hinge on the successful implementation of the Ethanol Blended Petrol Programme (EBP20) and overcoming challenges related to feedstock and infrastructure. We are confident in the Government’s commitment to achieving the 20% ethanol blending target by 2025-26. We anticipate favourable policy developments on ethanol pricing, feedstock availability etc. which will enable companies to plan their distillery expansions effectively and ensure efficient ethanol production for the 2024-25 Ethanol Supply Year. Overall, the outlook remains stable for the upcoming sugar season, supported by strong domestic prices and Government initiatives”, he further added.
The government is optimistic about India reaching a 20% ethanol blending target by 2025. According to the Petroleum Planning & Analysis Cell (PPAC) Monthly Ready Reckoner report, ethanol blending with petrol reached 15.90% in June.
To meet the 20% blending goal by 2025, approximately 1016 crore liters of ethanol will be needed, with a total ethanol requirement of 1350 crore liters, including for other uses. To achieve this, around 1700 crore liters of ethanol production capacity must be established by 2025, assuming plants operate at 80% efficiency. The government’s estimate for ethanol demand considers the growth in petrol-based vehicles, including two-wheelers and passenger vehicles, as well as projected sales of Motor Spirit (MS).
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