Only 175 sugar mills can produce ethanol out of the 530 in operation across the country, according to the Indian Sugar Mills Association (ISMA). In June 2018, the government decided to provide interest subvention on loans for new and expanded ethanol production capacities. This was done to increase ethanol production capacity in the country
The Department of Food and Public Distribution has approved 260 ethanol projects on subsidised loans, for which the sugar factories have to tie up with banks. However, the distilleries should comply with ‘zero discharge’ norms, as several mills have been either fined or ordered for closure by the Central Pollution Control Board or the National Green Tribunal in the past.
The ethanol requirement for the country stands at 330 crore litres for 10 per cent blending with petrol in 2019-20 (Dec-Nov), against which the mills contracted for 245 crore litres of supplies, but have supplied only 175 crore litres till mid-October 2019 — achieving an average blending rate of 5.5 per cent for the country as a whole.
The National Biofuels Policy 2018 has allowed the production of ethanol from different raw materials, including cane juice, corn, and damaged and surplus foodgrains. The Centre has fixed remunerative prices for ethanol made from cane juice, B-heavy molasses, C-heavy molasses and damaged grains under the Ethanol Blended Petrol Programme for the forthcoming ethanol supply year, commencing December 1. Oil Marketing Companies have invited bids for a demand of 511 crore litres of ethanol.
Abinash Verma, director general at ISMA, said: “It is strongly recommended that all mills should take advantage of the opportunity and set up ethanol production capacities, as this will give them the much-needed flexibility to control surplus sugar production and divert the same towards ethanol instead. The millers then need not worry too much about fluctuating cane production, sugar prices or inventory build-up of unsold sugar.”
Verma said mills have been improvising to meet the standards of the CPCB and the NGT. Despite attempts by the government to improve ethanol production, many mills are apprehensive about the huge investment required to upgrade their current facilities or set up new ones.
“In an ideal case, if all 260 projects, which have been approved for subsidised loans for new distilleries or for expansion, were operational we could expect additional ethanol production capacities worth 250 crore litres. That could help us in producing and giving 550-600 crore litres in a couple of years. We can then start looking at 15 per cent blending levels for the country, and start planning to achieve government’s target of 20 per cent blending by 2030. There will be enough feedstocks for these levels, especially when we look at sugarcane juice as a viable option.” said Verma.
Verma added ISMA estimates that ethanol production from all feedstocks could reach 550-600 crore litres of ethanol in next 2-3 years. With the subsidy on loans being provided by the government, mills need to respond by setting up capacities to not only start producing ethanol and improve cash flows and profitability, but also develop flexibility and reduce surplus sugar production.