Maharashtra’s co-operative sugar mills are eyeing investments to the tune of Rs 2500 crore over the next two years to increase ethanol production capacity following higher prices for the fuel announced by the central government on Tuesday.

”Maharashtra’s sugar mills have a capacity to produce to 57 crore litres of ethanol every year and this can be doubled over the next two years with an investment of around Rs 2500 crore,” an office-bearer
from the Maharashtra State Sugar Co-operatives Federation said. The sugar mills controlled by prominent politicians are likely to seek funding from the Maharashtra State Co-operative Bank and central funding agencies for the new venture.

The last financial year however saw Maharashtra’s sugar mills produce less than 14 cr litres of ethanol on the grounds that price paid by oil marketing companies are not lucrative enough.

However production is expected to be ramped up rapidly after the Union government’s decision to pay Rs 59.13 per litre of ethanol from sugarcane juice, sugar and sugar syrup.

Oil marketing companies have also been asked to pay “realistic” transportation charges to the sugar
mills, a sore point with the co-operatives in Maharashtra.

 “Till now ethanol was not allowed to be produced from raw sugar. But the higher prices for ethanol from raw sugar is expected to see a sharp reduction in the surplus sugar stocks held by sugar mills,” says Shekhar Sanghvi, a commodities analyst in Mumbai.

To produce ethanol from sugar, it will first have to be dissolved in water and converted into syrup before further processing.

Till last year, ethanol was allowed to be produced only from mollasses.
The central government’s bio-fuel policy aims at achieving 10 per cent ethanol blending with petrol by 2022, and 20 per cent by 2030.