Government may hike price of sugarcane ethanol by 5% for 2023-24, says source
Informist, Friday, Sep 22, 2023
By Afra Abubacker and Sayantan Sarkar
NEW DELHI – The Centre may increase prices of ethanol derived from sugarcane by 5% for the ethanol supply year starting November, an industry source familiar with the matter told Informist.
Sugar mills manufacture ethanol, and oil marketing companies are the major buyers, using it for blending with petrol to make it a greener fuel.
Ethanol derived from all varieties of sugarcane will see a flat 5% increase in prices from Nov 1, the source said.
Currently, the price of ethanol derived from 100% sugarcane juice is 65.61 rupees a ltr, from B-heavy molasses 60.73 rupees, and from C-heavy molasses 49.41 rupees a ltr.
"Unlike other countries, ethanol prices in India track fair and remunerative prices of sugarcane," said the source. In other countries, prices of ethanol take cues from international crude oil prices.
Ethanol prices are linked to the fair and remunerative prices paid to farmers on sugarcane purchases. Fair and remunerative prices of sugarcane have been raised by 10 rupees to 315 rupees per 100 kg for the 2023-24 (Oct-Sep) sugar season.
The government has been implementing ethanol blending with petrol throughout the country, under which oil marketing companies sell petrol blended with ethanol. Under the National Policy on Biofuels, the government has set a target to achieve 20% ethanol blending in petrol by 2025, against the earlier target of 2030.
The government is also pushing for increased blending of ethanol with petrol as India imports more than 85% of its oil requirements, which takes a toll on the import bill.
At present, 11.7% ethanol is blended with petrol, according to Food Secretary Sanjeev Chopra. The government had earlier rolled out the target of 20% ethanol-blended petrol in several states and Union territories, as part of the ethanol blending programme.
In a letter in July, the Indian Sugar Mills Association had urged the government to increase the price of ethanol to 69.85 rupees per ltr from the current 65.61 rupees a ltr, considering the recent hike in fair and remunerative prices of sugarcane.
"It is estimated that about 4.5 mln tn of sugar will be diverted towards the production of ethanol next season (Oct-Sep), as compared to about 4.1 mln tn estimated to be diverted this year," the association said. In its preliminary estimate, it pegged the country's net sugar output after diversion to ethanol for 2023-24 (Oct-Sep) at 31.7 mln tn, down 3.4% on year from 32.8 mln tn in the ongoing season ending September.
In the letter, the association said about 12 bln ltr of ethanol was needed to achieve the 20% blending target by 2025-26. In 2022-23 (Dec-Nov), the sugar industry signed contracts for 4 bln ltr of ethanol supply, it said.
The Indian Sugar Mills Association estimates that an additional 8 bln ltr of ethanol is needed to meet the blending programme target. For this, an investment of 175 bln rupees with a reasonable return on investment is required to increase the ethanol production capacity of mills. End