Sugar mills likely to earn Rs 15,000 crore due to more ethanol blending

CHENNAI:  The Union government’s push to increase the blending of ethanol in auto fuels is set to result in increased revenues to cash-strapped sugar mills. In a written reply to the Lok Sabha, Union Minister of State for Food and Consumer Affairs Sadhvi Niranjan Jyoti said that sugar mills are likely to earn as much as Rs 15,000 crore revenue from the sale of ethanol to oil marketing companies during the current sugar market year (December-November). 

This is a significant increase when compared to the previous years, where, according to the minister’s reply, sugar mills earned Rs 22,000 crore in total during the three preceding sugar seasons: 2017-18, 2018-19 and 2019-20. 

The minister noted that excess sugar stock of 60-70 lakh tonnes has kept ex-mill prices of sugar low, resulting cash loss to mills. A cascading effect has also led to increasing cane arrears to sugarcane farmers on the part of sugar mills.

“In order to find a long-term solution to deal with the problem of sugar, government is encouraging sugar mills to divert excess sugarcane to ethanol which is blended with petrol, which not only serves as a green fuel but also saves foreign exchange on account of crude oil import,” Jyoti said.

The amount of ethanol being procured by oil marketing companies has grown manifold over the past few years. In the last two sugar seasons (2018-19 and 2019-20), about 3.32 lakh tonnes and 9.26 lakh tonnes of sugar respectively were diverted towards ethanol production. During the current sugar season 2020-21, the government expects more than 20 lakh tonne to be diverted. Last month, the Union government advanced several ethanol blending targets, which sent sugar mill stocks soaring-some stocks even hitting upper circuits on  June 7.

20 lakh tonne sugar to be diverted to ethanol
Sugar mills earned Rs 22,000 crore during the three preceding sugar seasons: 2017-18, 2018-19 and 2019-20, Union Minister of State for Food and Consumer Affairs Sadhvi Niranjan Jyoti told the Parliament