'Sudden' prohibition on using sugarcane juice for ethanol puts Rs 15,000 crore investment at risk, says ISMA

The decision will hurt the capacity utilisation of the plants set up for the production of green fuel, which in turn will impact the delays in payments to sugarcane farmers, the report said quoting the sugar industry body.

The government has recently prohibited the use of sugarcane juice for ethanol production, anticipating a potential decrease in sugar production in the 2023-24 marketing year (October-September).

In reaction, the Indian Sugar Mills’ Association (ISMA) has called on the government to expeditiously reassess the pricing of ethanol produced from B-heavy and C-heavy molasses, sugar by-products, to improve the financial condition of the millers.

The ban has presented a difficult situation for the industry, ISMA President Aditya Jhunjhunwala said at its 89th annual general meeting, the media report said.

He urged the government to reconsider the decision.

He stressed the pressing requirement for a prompt adjustment and announcement of ethanol prices derived from B-heavy and C-heavy molasses.

Jhunjhunwala argued that such action would aid mills in alleviating potential losses resulting from the recent prohibition.

In the 2022-23 marketing year, India exported 64 lakh tonnes of sugar. Ethanol blending with petrol reached 12 percent in the 2022-23 supply year (November to October).

Jhunjhunwala indicated that the anticipated total sugar production in 2023-24 is 325 lakh tonnes (excluding diversion to ethanol), while domestic consumption is projected to be 285 lakh tonnes, according to the report.

He mentioned that the government is likely to permit the diversion of 17 lakh tonnes of sugar for ethanol production in the 2023-24 supply year.

Further, Jhunjhunwala noted the potential for diverting another 17-20 lakh tonnes of sugar for ethanol.

Jhunjhunwala demanded that the government assess sugar production and ethanol supply by around January 15 and make appropriate decisions.

He stated concern that the industry had invested approximately Rs 15,000 crore in the last three years to enhance ethanol production capacity, and this substantial investment is now at risk.

The ethanol production capacity has surged from 280 crore litres to 766 crore litres over the past three years. The industry is calling for an increase in the price of ethanol derived from B-heavy molasses to Rs 64 per litre from Rs 59 per litre.

Further, the industry members are advocating for an upward revision in the rate for C-heavy molasses to Rs 58-59 per litre from Rs 49 per litre.