In a major relief for sugar factories and distillery projects across the country, the central government has reversed its previous ban on the production of ethanol from sugarcane juice, sugar syrup, B Heavy molasses, and other raw materials.
The ban, initially imposed on December 6, 2023, and partially relaxed on December 15, 2023, has now been fully withdrawn, allowing distilleries to operate at full capacity during the 2024-25 season.
This decision marks a significant shift in the government’s ethanol policy, which has been closely linked to its broader energy goals, particularly the aim to increase the ethanol blending ratio in petrol to 20% by 2025-26.
As of July 2024, the country’s ethanol production capacity stood at 1,590 crore liters, though only 505 crore liters were purchased by oil companies during the 2023-24 fiscal year, contributing to a blending ratio of 13.3%.
The recent government order is expected to drive a surge in ethanol production, effectively diverting more sugar for ethanol production, which in turn is anticipated to improve the financial health of sugar factories nationwide. This move aligns with the central government’s broader economic objectives, including reducing the country’s dependency on fossil fuels and boosting the agricultural sector.
The National Federation of Cooperative Sugar Factories (NFCSF), a key stakeholder in the sugar industry, played a pivotal role in advocating for the removal of the ethanol production ban.
NFCSF President Harsh Vardhan Patil expressed gratitude towards key government figures, including Prime Minister Shri Narendra Modi, Union Home and Cooperation Minister Shri Amit Shah, Petroleum Minister Shri Hardeep Singh Puri, and Food Minister Shri Prahlad Joshi, for their efforts in lifting the ban.
Patil highlighted that the NFCSF had been in continuous communication with the ministers, including a public appeal made during a conference in New Delhi on August 10, 2024, where he presented the industry’s case with detailed facts and figures.
Despite the positive development, several issues remain unresolved. The purchase rates for ethanol produced from sugarcane juice, sugar syrup, and B Heavy molasses have not been updated for the past ten months, leaving sugar mills in a state of uncertainty regarding their production schedules.
Additionally, the minimum selling price of sugar, a longstanding demand of the NFCSF, is yet to be announced. Addressing these issues is crucial for the industry’s long-term stability and growth, reads a press release from the apex sugar co-op body, NFCSF.
The central government had previously taken a significant step on April 24, 2024, by issuing an ordinance allowing the use of 7.5 lakh tonnes of B Heavy molasses for ethanol production. According to this ordinance, the purchase of ethanol from these molasses by oil companies will occur during the quarter from August 1 to October 31, 2024, potentially generating an income of Rs 2,300 crore for sugar mills.
In a related development, the NFCSF has urged 93 sugar mills across the country to upgrade their distillation machinery and extend their operational period by using maize for ethanol production after the molasses season ends.
This strategy, supported by expert recommendations from a workshop held in Pune earlier this year, is expected to enhance the income of these mills. The central government has also set a favorable purchase rate of Rs 71.86 per liter for ethanol produced from corn, and efforts are being made to apply the interest discount scheme to these projects, as per NFCSF Managing Director Shri Prakash Naiknavare.
This government decision is a significant step forward for the sugar and distillery sectors, promising enhanced production capabilities and financial stability, and paving the way for the achievement of the country’s ambitious ethanol blending targets.
