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Public sector oil marketing companies (OMCs) have announced an incentive of ₹6.87 per litre for ethanol produced from C-Heavy Molasses (CHM) for the ethanol supply year (ESY) 2023-24, which ends in October .
The incentive will be paid over and above the previous ESY (2022-23) procurement price of ethanol sourced from CHM at ₹49.41 per litre. The move is aimed at promoting the supply of ethanol from CHM, which has the lowest sucrose content.
After the government declares the price of ethanol sourced from CHM for ESY 2023-24, the incentive amount will be revised to ensure that the final amount is ₹56.28.
Ethanol prices now stands at ₹64 a litre from damaged rice, ₹66.07 from maize, ₹56.28 per litre from CHM and ₹60.73 per litre from B-Heavy Molasses (BHM).
On December 7, the government banned the use of sugarcane juice or sugar syrup for producing ethanol with immediate effect to ensure adequate availability of sugar for domestic consumption. However, the ban is a “temporary pause” due to a lack of clarity on sugar output for the current season.
Welcoming the development, sugar industry body ISMA’s President M Prabhakar Rao said, “However, I also believe that it should be further increased to help the industry navigate better in these uncertain times and ensure timely cane price payments, mitigation of losses and help augment ethanol production. Not to mention, the high interests that industry is paying for investments in the increase of ethanol production capacity that is now not being utilised fully.”
He also reiterated industry’s appeal to ban export of molasses with immediate effect and the fact that the industry awaits further increase in price of ethanol from BHM and sugarcane juice (SCJ).
Sources said that BHM is better compared to grain for producing ethanol. For instance, its effluent can be used as a slop in boiler thus saving fuel costs. Besides, dual feed unit distilleries may opt for CHM, which means that there can be a marginal increase in sugar production.
During ESY 2022-23, the OMCs floated a tender for 599.7 crore litres of ethanol, against which letters of intent (LoIs) for 567 crore litres were issued. During the year, SCJ accounted for 25 per cent of the ethanol production, BHM (45 per cent), CHM (1 per cent) and foodgrains (29 per cent).
India achieved the target of 12 per cent blending of ethanol with petrol in ESY 2022-23 and 10 per cent blending in ESY 2021-22. The Ministry of Petroleum and Natural Gas (MoPNG) has set a target of achieving 15 per cent blending in ESY 2023-24 (November 2023-October 2024).
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