Indian sugar mills association

Ethanol price hiked by up to Rs.1.84

Date:	04 Sep 2019

Source:	The Economic Times

Reporter:	ET Bureau

News ID:	42609

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NEW DELHI: In a major boost to the sugar industry, which produces ethanol as a by-product, the cabinet committee on economic affairs (CCEA) approved higher price for the product derived from different raw materials under the Ethanol Blended Petrol (EBP) programme.

Petroleum minister Dharmendra Pradhan said while announcing the decision on Tuesday that oil marketing companies will procure 2.6 billion litres of ethanol in 2019-20 and thereby help reduce India’s energy import dependency. The move is expected to help the sugar industry clear dues of farmers.

The CCEA increased the prices of ethanol from ‘C’ heavy molasses and ‘B’ heavy molasses by 29 paise per litre and Rs 1.84 per litre respectively.

As a result, the ‘C’ heavy molasses and ‘B’ heavy molasses will be priced at Rs 43.75 per litre and Rs 54.27 per litre, respectively.

Besides, the government for the first time allowed use of sugar and sugar syrup for ethanol making, fixing the price at Rs 59.48 per litre.

This will benefit farmers of Uttar Pradesh, Karnataka and Maharashtra, the second largest sugarcane producer, where assembly election is due in two months.

“All distilleries will be able to take benefit of the scheme and a large number of them are expected to supply ethanol for the EBP programme,” the CCEA said. “Remunerative price to ethanol suppliers will help in reduction of cane farmer’s arrears, in the process contributing to minimising difficulty of sugarcane farmers.”

Pradhan said that next year India will save $1 billion in crude oil imports because of ethanol blending.

Barely a week ago, the government had announced a Rs 6,268 crore subsidy for export of 6 million tonnes of sugar for 2019-20 marketing year starting October.

According to industry executives, cane dues of around Rs 12,000 crore are yet to be paid to farmers for 2018-19 marketing season, which ends in September this year.

“The arrears have come down drastically from Rs 85,546 crore at the start of 2018-19 season due to various interventions by the Centre, including increasing of minimum selling price (MSP) of sugar from Rs 29 to Rs 31 kg besides extending soft loans to sugar industry to the extent of Rs 7,900-10,540 crore and creating Rs 1,674-crore buffer stock of 4 million tonnes sugar,” said a senior food ministry official.

The industry responded positively to the government’s move, saying that this will attract investment in expansion of ethanol production capacities.

The government has been implementing the EBP programme, wherein oil marketing companies sell petrol blended with ethanol up to 10%. “This will ensure that we will achieve the government’s 10% ethanol blend targets almost certainly by 2022,” said Abinash Verma, director general, Indian Sugar Mills Association.

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