The sugar industry is looking forward to the government revising upwards the price of ethanol in line with the increase in the sugarcane fair and remunerative price (FRP), announced recently. Ethanol prices have not been revised for the past two years, said Deepak Ballani, Director-General, Indian Sugar and Bio Energy Manufacturers Association (ISMA).
“In the last two years, there was a revision of almost 11.5 per cent in the sugarcane FRP. Although my feedstock prices have gone up because it is regulated by the government, the ethanol rate, which is also regulated by the government, has not been revised. And that has really impacted our distilleries quite a bit,” Ballani said.
During 2022-23, the FRP for sugarcane was fixed ₹305 per quintal, while the price for ethanol produced from sugarcane juice was fixed ₹65.61 per litre. For ethanol produced from B-heavy molasses, the price was fixed at ₹60.73 per litre, and for C-heavy molasses, it was ₹49.41 per litre during the year. The FRP was increased to ₹315 per quintal during 2023-24 and then to ₹340 per quintal for during the ongoing 2024-25 sugar season.
Lower than maize
“While the government is giving ₹72 per litre for ethanol from maize, at the same time, the ethanol from sugarcane is getting only ₹65.61, which is much below the cost of production. I feel this is a big anomaly in the entire ethanol pricing, because historically, whenever FRP was increased, the government had increased or corrected the ethanol price. This was done for almost five years, but last two years, this was not revised,” Ballani said
As the government assured a proper price administrative mechanism for ethanol, Ballani said the industry had put up a huge capacity with an investment of around ₹40,000 crore. “We have an ethanol capacity of around 850 crore litres today. As prices have not been corrected, it is creating a lot of problems. And now, the FRP has again been increased for 2025-26 to ₹355 per quintal. We now expect that the government will definitely increase or correct the ethanol price.
“Otherwise, the entire diversion into ethanol will be a big question mark. We are urging the government now that this will be the third year now when the prices have not been corrected. So the prices as per the linkage formula from FRP to ethanol price should be made. And this should be decided and announced before the tender is released,” Ballani said.
Further, Ballani said for the sugarcane FRP of ₹315 per quintal, the industry was looking at a price, as per the formula, for ethanol produced from ethanol at ₹71 per litre, B-heavy molasses at around ₹65 and C-heavy molasses at ₹61 per litre. “For the FRP of ₹340, the ethanol price produced from syrup would have been ₹73.14 per litre, B-heavy molasses at ₹67.70 and C-heavy molasses at ₹61.20 per litre. At ₹355 per quintal, as per the formula, the ethanol price will now obviously it will go higher,” he said.