In an effort to encourage ethanol production in the country, the Centre has amended the Sugarcane (Control) Order, 1966 by allowing the setting up of a unit exclusively to produce ethanol.

In the amendment gazetted on Monday, the Centre has amended the provisions which had till now not allowed direct production of ethanol from sugarcane. Until now, ethanol can only be produced from sugar juice or from molasses, a byproduct in the sugar manufacturing process. Mills typically crush cane with a total fermentable sugars (TFS) content of about 14 per cent. Typically, one tonne of cane yields 115 kg of sugar, if the recovery is 11.5 per cent, and 45 kg of molasses that can help produce 10.8 litres of ethanol. But mills can ferment the cane juice to produce 840 kg of ethanol but no sugar will be derived.

Cut down in inventories

The Centre has been encouraging sugar mills to produce ethanol since it helps cut down the huge inventories of over 10 million tonnes the industry has been carrying over the last two years. It is also aimed at achieving 10 per cent blending of fuel-grade ethanol with petrol by next year.

“The definition of sugar factory has been amended to include a factory set up to make only ethanol or spirit from sugarcane,” said Praful Vithalani, President, All India Sugar Traders Association (AISTA).

Earlier, it was mandatory for the factory to manufacture sugar also, he said.

Sanjay Taparia, AISTA Secretary, said the Control Order amendment clears a “procedural issue in law” by allowing a standalone ethanol manufacturing unit.

“The order also does away with ₹1 crore bank guarantee that has to be paid while setting up a sugar factory for the ethanol units. It also gives three years time for the setting up of an ethanol unit under the Industrial Entrepreneur Memorandum,” he said.

Definition expanded

In order to ensure the ethanol-blending target is met, the Centre is also extending financial assistance by way of interest subvention for five years at a maximum rate of six per cent interest for loans availed of by sugar mills, entrepreneurs and distilleries, from banks to set up such units.

The amendment also expanded the definition of ethanol to include rectified spirit used in chemical industries, extra neutral alcohol used for making liquor as well as sanitisers and other forms of ethyl alcohol, said Abinash Verma, Director General of the Indian Sugar Mills Association. “Till now any alcohol that we were making from sugarcane juice was to be used only for making ethanol which is to be blended with fuel. Now a standalone ethanol maker can use not just for fuel-grade ethanol, but also for rectified spirit used for chemical purposes as well as extra neutral alcohol for making liquor and sanitisers, etc,” Verma said.

“More importantly, the amendment also makes it mandatory for these stand-alone ethanol plants to pay fair and remunerative price to sugarcane farmers. In other words, a big industry cannot come in and start buying sugarcane from farmers at whatever price. They are obligated to pay fair and remunerative prices to farmers,” the ISMA official said.

Tapariya said that the distance between two ethanol plants will be 15 km radius, the same as for sugar mills.