Better water availability and increased acreage under sugarcane cultivation will make it possible to produce 375-400 crore litres of ethanol in 2020-21, more than double of 170 crore litres that sugar mills and distilleries promised to supply for the ethanol-blending programme (EBP) this season, the Indian Sugar Mills Association (ISMA) said on Monday.

With this expected increase in ethanol production, the government is targeting an ethanol supply target of 300-350 crore litres, enough to achieve 7.5-8 per cent ethanol blend levels with petrol in the coming ethanol season, which commences from December 2020 and runs till November 2021, it said.

This season, ethanol manufacturers and sugar mills have entered into ethanol supply contracts with oil marketing companies (OMCs) for 170 crore litres, of which 92.5 crore litres have been supplied till June 22, helping achieve an average all India blending of 5.09 per cent. The blending levels achieved in some States, including Uttar Pradesh, Haryana, Punjab, Uttarakhand, Bihar and Karnataka, are much higher and ranged between 8.5 per cent and 9.8 per cent, ISMA said.

Significantly, many sugar mills will produce 8 lakh tonnes less sugar this year as they diverted B-heavy molasses and cane juice away from sugar production. While ethanol produced from B-heavy molasses and cane juice accounted for 58 crore litres in the total supply so far, another 23 crore litres are expected to come from them during the remainder of the current season, which ends on November 30.

“The diversion will not only reduce surplus sugar availability in the country, but also reduce the carrying costs to that extent for the sugar mills. It has and will also give better returns to mills because ethanol prices fixed by the government are more remunerative than sugar currently, as also give them better cash flows because of immediate sale of the ethanol as compared to delays in sale of the sugar, which could have been stuck in godowns of mills for more than 10-12 months,” the sugar industry body said.

It said that despite the fall in petrol consumption/sales during the lockdown period, supplies of ethanol were not too badly affected, and sugar mills have been able to supply as per the contracts during the lockdown too.

However, ISMA pointed out certain important issues that required urgent attention of the government that would help improve ethanol production and reduce some surplus sugar production next year. It requested the government to increase blending levels to 15 per cent in and around the States where surplus ethanol production happens. Similarly, it said OMCs should pay the same transportation charge that they charge petrol stations for carrying fuel to ethanol manufacturers. In many cases, ISMA alleged, the transportation charge paid by OMCs is ₹4-5 lower per litre.

It also said that the States such as Delhi and Rajasthan wrongly charge import fee on ethanol being supplied to depots located in their jurisdiction, while some other States control the movement of ethanol.

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