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In a move to stop diversion of sugarcane towards alcohol amid reduced production, the Government has decided to keep a strict vigil on the sugar mills. A day after oil marketing companies (OMCs) announced the revised allocation of ethanol for each sugarcane-based unit, the Food Ministry on Thursday directed excise commissioners in States to strictly follow the recent order passed by it on diversion.
Sharing the copy of the December 15 communication, the Ministry informed the commissioners that all sugar mills/distilleries have been instructed that “No diversion of sugarcane juice and B Heavy molasses is allowed for production of Rectified Spirit (RS)/Extra Neutral Alcohol (ENA)“.
“It is requested that excise commissioners may kindly ensure strict compliance of these orders and intimate violations, if any, of these orders to this office immediately. Suitable action may also be taken as per extant provisions of the State Excise Act/Rules against the violating organizations,” said Sunil Kumar Swarnkar, an undersecretary in the Food Ministry, in the letter.
Major deciding factor
Industry sources said in the 2022-23 season (October-September), about 7 lakh tonnes (lt) of sugar got diverted towards RS/ENA. Amid an expected surge in demand for alcohol in the next few months, which may flare up the rates of RS/ENA offered by liquor companies, there was a good chance of more than 7 lt could being diverted this year, the sources said.
However, the ethanol rates to be offered by OMCs which are likely to be announced this month, will be a major factor to decide on diversion, the sources said.
The government may allow around 28 crore litres of ethanol from now on to be produced from sugarcane juice (SCJ) as per the indicative revised allocation for SCJ and b-heavy molasses (BHM) released by the OMCs. As per the indicative allocation list, the OMCs have allocated 42.56 crore litres to be produced from SCJ, equivalent to produce 7 lt of sugar. For BHM, a quantity of 114.76 crore litres have been allocated that will lead to a diversion of 10 lt in terms of sugar. This allocation has been made for two quarters — November 2023-April 2024 period.
Industry sources said around 15 crore litres of ethanol has already been made from sugarcane juice before the imposition of ban on December 7. Hence, from now on, around 27.56 crore litres more needs to be produced to meet the revised allocation.
Before the ban, the OMCs had allocated 135.43 crore litres of ethanol to be produced from SCJ, and 130.13 crore litres from BHM for the same period. On December 7, the government banned sugar mills and distilleries from using sugarcane juice or sugar syrup for producing ethanol with immediate effect to ensure adequate availability of sugar for domestic consumption.
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