India’s ethanol blending: Govt says committed to EBP target, industry begs to differ

The Indian Government on Friday said the ban on using sugarcane juice or syrup for producing ethanol is “a temporary pause” that will be reviewed every month. The Centre said it is committed to achieving the 20 per cent ethanol blending with petrol (EBP) target by 2025. The statement comes a day after the ban was imposed

However, many industry experts doubt if the 12 per cent blending can be achieved this season after the restriction was imposed as the cane juice had a 25 per cent share in last year’s total ethanol production of around 500 crore litre.

The Government has said though lower output of sugar was anticipated, it was “not expected to go down further”.

Addressing the media, Food Secretary Sanjeev Chopra said: “We were anticipating that the (sugar) production will be low, but we did not anticipate that it will go down further. The recent rains have brought down the recovery level further. The drought in Maharashtra and Karnataka has been worrying as there are reports of 20-40 per cent reduction in sugar production in the current season in these two States.

• Also read: Ethanol blending falls to 11.72% in August amid feedstock shortage

Ensuring availability

“We have to ensure that the domestic food security of the country is not compromised. Keeping that in view, we felt that it will be appropriate to stop the diversion of sugarcane juice to ethanol.” The decision will ensure uninterrupted availability of sugar to 140 crore people of the country, Chopra said defending the decision.

Maharashtra’s sugar production is estimated to drop to 85-87 lakh tonnes (lt) from 105 lt last season and in Karnataka it may decline to 35-37 lt from 60 lt.

Petroleum Secretary Pankaj Jain said it is committed to meeting the 20 per cent ethanol blending target by 2025-26 and the ban on the use of sugarcane juice and sugar syrup has been imposed is a “temporary pause” due to a lack of clarity on sugar output for the current season. The government has a plan in place to promote ethanol production through various feedstock such as B and C-heavy molasses, damaged rice and maize, he said.

Import on cards?

Saying that the situation has not reached a stage for the country to undertake import of ethanol, Jain however did not completely rule out the possibility.

Despite initial apprehensions expressed at different quarters at the beginning of the last ethanol supply year (December-October), still 12.1 per cent blending was achieved and the government is very much hopeful of meeting the 15 per cent target set for 2023-24 (November-October) season, he said.

“The government is fully committed to EBP and absolutely, there is no question of dilution of our commitment to that programme,” Jain said.

For ESY 2022–23, the OMCs floated a tender for 599.7 crore litres of ethanol against which letters of intent (LoIs) were issued for 564.45 crore litres as of August 2023. According to industry sources, mills were awarded orders to produce about 270 crore litres — 130 crore litres (equivalent of 2.2 mt of sugar) from direct juice or syrup and 135 crore litres (equivalent of 1.1 mt of sugar) from B-heavy molasses. About 290 crore litres from grain-based source (including dual-feed based sugar plants) were also finalised in the first round (cycle 1) of supply tender.

WISMA says ‘shocking decision’

In a representation to prime minister Narendra Modi to reconsider the ban, the West Indian Sugar Mills Association (WISMA) termed the decision “shocking news to the sugar industry”, which will have irreparable consequences on the sector and a setback to the EBP programme.

Speaking to businessline, WISMA President BB Thombare said: “The government should allow ethanol from sugarcane juice/syrup at least the quantity agreed to by OMCs up to April 2024.” He said due to this decision it will be difficult to meet even 12 per cent blending. He also suggested if the ban is not lifted, the interest subvention scheme should be extended for the suspended period of restrictions on manufacturing of ethanol from sugarcane juice/syrup.

Sources said the Government may announce ethanol prices from different feedstock this month for the current season. In the 2022-23 season (December to October), ethanol from direct sugarcane juice/syrup was priced ₹65.73/litre; it was ₹60.73 for B-heavy molasses and ₹49.41 for C-heavy molasses.

Similarly, the rates were ₹66.07/litre for maize, ₹64 for damaged rice, ₹58.50 for FCI’s subsidised rice supplied at ₹20/kg (since discontinued).

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