The Hindu Business Line : ‘Oil firms can make ethanol from cane juice’

Offering comfort
While ensuring adequate alcohol availability for oil companies, it will also help mills to de-risk against downturns.
There is no binding requirement for oil firms to produce a single kg of sugar from their newly acquired mills.

Harish Damodaran

New Delhi, Jan. 11

The Centre’s recent decision allowing only sugar mills to produce ethanol directly from sugarcane juice will not prevent Reliance Industries, Hindustan Petroleum Corporation Ltd (HPCL) and other refineries from employing this more viable manufacturing option for meeting their captive blending requirements.

Currently, ethanol is being manufactured only from ‘C’ (final-stage) molasses, generated as a by-product during crushing and constituting about 4.5 per cent of the sugarcane by weight. By the ‘C’ molasses route, mills can produce about 100 kg of sugar and 11 litres of alcohol for every tonne of cane they process.

Considering the increased demand for ethanol – in view of the Centre mandating five per cent blending in petrol, with the doping percentage to double from October – the sugar mills and user industries have sought permission to employ the more efficient ‘B-Heavy’ (intermediate-stage) molasses and the direct sugarcane juice routes to augment production.

This is expected to ensure adequate alcohol availability for oil companies as well as potable liquor and chemical units, while simultaneously helping mills to de-risk against downturns in the sugar cycle.

Reduce sugar output

The enabling notification for manufacture of ethanol “either directly from sugarcane juice or from molasses, including B-Heavy molasses, or both” – through an amendment to the Sugarcane (Control) Order, 1966 – was issued by the Ministry of Consumer Affairs, Food and Public Distribution on December 28.

The ‘B-Heavy’ molasses route will reduce the output of sugar to 85-90 kg, while boosting that of alcohol to 21-22 litres per tonne of cane. If mills choose not to produce any sugar and convert the entire juice extracted from cane to alcohol, the latter’s output would jump further to about 76 litres.

The December 28 order has, however, at the same time, specified that “production of ethanol directly from sugarcane juice shall be allowed in case of sugar factories only”. What this means is that any oil company or even standalone distillery wanting to produce alcohol (whether ethanol or rectified spirit) from ‘C’ and ‘B-Heavy’ molasses can do so freely. But to manufacture directly from sugarcane juice, they will necessary have to establish a new sugar mill or take over existing ones (as Reliance and HPCL have done only last week).

Chance for sick units

“To produce ethanol from sugarcane juice, you need a sugar mill with a distinct plant code number and short name issued by the Directorate of Sugar,” a Ministry official clarified. That, in turn, opens up a veritable market for sick factories, with their proprietors probably even demanding a premium from potential buyers (oil companies) simply on account of being registered sugar mills!

The order, significantly though, does not lay down any restrictions on the extent of ethanol that can be produced through the direct sugarcane juice route by a mill. While employing the ‘C’ and ‘B-Heavy’ molasses routes, the mills end up manufacturing more or less sugar; whereas in the former case, the ‘sugar mill’ does not produce any sugar. As of now, then, there is no binding requirement for Reliance or HPCL to produce a single kg of sugar from their newly acquired mills. They can, instead, be exclusively used to cater to their captive ethanol needs.

“We have for the time being allowed mills to decide for themselves how much of ethanol to produce from either or the three routes,” the official added. The order has stated that when a factory manufactures ethanol directly from sugarcane juice or B-Heavy molasses, “then every 600 litres of ethanol so produced directly from sugarcane juice or B-Heavy molasses shall be taken a equivalent to one tonne production of sugar”.