Sugar mills across the country have contracted orders to supply 302.3 crore litres of ethanol to oil marketing companies (OMCs). This is 70 per cent more than the 178 crore litres supplied in the previous season.

This will help mills to reduce sugar production by 20 lakh tonnes (lt) due to the diversion of sugarcane juice and B-heavy molasses for ethanol production in this current sugar season.

According to the Indian Sugar Mills Association (ISMA), 117.72 crore litres of ethanol have already been delivered for the country’s ethanol blending programme. Nearly 77 per cent of this quantity was produced from sugarcane juice and B-heavy molasses. India’s ethanol marketing season extends from December to November next year.

“Last year, we were able to reduce 7-8 lt of sugar due to ethanol production. And this year it would be around 20 lt by the end of the season. Ethanol helps reduce the production of surplus sugar; besides it gives better returns,” said ISMA Director-General Abinash Verma. Moreover, ethanol is sold almost immediately unlike sugar which takes several months to sell.

He said sugar companies have been increasing ethanol production every year except last year when sugar production declined. This was on account of drought in Maharashtra and northern Karnataka. In 2018-19, ethanol production was 190 crore litres.

Troubles with the OMCs

The current season’s contracted production of 302.53 crore litres is good enough for a national blending target of 7.36 per cent, but as many as 11 States (which are either sugar-producing States or their neighbouring States) such as Uttar Pradesh, Maharashtra, Karnataka, Uttarakhand, Bihar, Haryana, Punjab, Delhi, Goa, Gujarat and Himachal Pradesh managed a higher ethanol blending percentage of close to 10 per cent.

The problem, however, is relating to offtake, said Verma. “Oil companies are still not geared up as much as we wanted them to be. If we have to move ethanol from Uttar Pradesh to Kerala or from Maharashtra to Rajasthan, it is a criss-cross. The planning by oil companies is very poor. Besides, the transport rate they give us is much lower than what we actually incur ,” the ISMA DG said.

He said the sugar industry has been telling OMCs to pay the full transport cost. If not, take it from the mill sites. Or they should set up their own transport agencies. “They have to come on board and the government has to intervene to ensure these transport rates are rationalised,” Verma said.

Higher production

Meanwhile, sugar mills in the country produced 299.15 lt of sugar till April 30 — which is 41lt more than the 258.09 lt produced in the corresponding period last year. While mills in Maharashtra produced 105.63 ltcompared to 60.95 lt in the same period last season, sugar production by Uttar Pradesh mills was 105.62 lt, which was 10.9 lt lower than that in the same period last year. Karnataka, where all 66 mills stopped crushing already, produced 41.67 lt (34.94 lt). As compared to 112 mills last year, only 106 mills continued crushing beyond April 30 this year.

Sugar mills have so far won contracts for exporting 54-55 lt in the current season, according to market reports. This is more than 90 per cent of the sugar export quota fixed by the government. While 25.24 lt of sugar was exported between January and March, around 10 lt was expected in April. Similarly, as per market estimates, another 8-10 lt sugar would be exported in May as well.