The food ministry’s latest notification allowing India’s sugar producers to convert surplus stocks into ethanol to be blended with petrol comes as an additional support measure for the industry.
However, mills in Uttar Pradesh, the top sugar-producing state, are not keen on converting old stocks to ethanol. In Maharashtra, they are undecided about the benefits of the scheme, even though the state’s sugar industry had pushed for permission to convert old sugar into ethanol.
The Sugarcane (Control) Amendment Order, 2019, dated November 19, allows only sugar factories to convert sugar, sugary syrup and sugarcane juice directly into ethanol. According to the amendment, every 600 litres of ethanol so produced will be considered equivalent to one tonne of sugar.
The government issued the order after the Maharashtra Cooperative Sugar Factories Federation (Sakharsangh) and the National Cooperative Sugar Factories Federation pursued the matter.
“Converting the old stock of sugar into ethanol may not be a prudent decision financially, but it is a wise business decision,” said Sanjay Khatal, managing director of Sakharsangh.
Mill incur a cost of Rs 6-7/kg to convert sugar into ethanol, which the government will buy at Rs 59.48/litre, and their realisation will be equivalent to the prevailing sugar price of Rs 31.50/kg.
Maharashtra faces a sugarcane shortage due to drought and floods and it will be difficult to fulfil the ethanol quota allocated by oil marketing companies to the state.
Khatal said converting sugar into ethanol will help to increase supplies for the national ethanol blending programme and will help reduce sugar stocks, giving much-needed liquidity to mills, which are in poor fiscal health.
Sugar mills are required to pay the fair and remunerative price set by the central government to farmers within 15 days of delivering cane to factories.
Sugar millers in Uttar Pradesh are least interested in using old sugar for ethanol production.
“What we are focussing on is to export the old stock of sugar to reduce the stored stocks,” said the marketing head of one of the top five private sugar mills in the state.
UP mills account for about 70% of the 1.2 million tonnes contracted for exports by the Indian sugar industry so far. Their strategy strategy is to produce ethanol from B-heavy molasses.