The government is considering allowing sugar mills to manufacture ethanol using their excess B-heavy molasses as feedstock, amid comfortable sugar supply and stable prices in the market, according to sources. Currently, sugar mills are holding an excess stock of more than 8 lakh tonnes of B-heavy molasses -- a byproduct of the sweetener -- produced before the ban on its use on December 7, last year.

A week later, the government reversed the ban and allowed the use of both cane juice and B-heavy molasses but it permitted within the overall cap of a sugar diversion of 17 lakh tonnes for ethanol production for the 2023-24 supply year (November-October).

"The industry has stored B-heavy molasses for making ethanol after the crushing gets over. But the government banned it suddenly and imposed a cap. Mills now have excess stock of B-heavy molasses," the sources told PTI.

Now that the crushing is coming to an end, the sugar industry has been demanding the government to permit the use of available excess stock of B-heavy molasses for ethanol production, the sources said.

"The proposal is under consideration. Discussions are going on," the sources said.

Sources said the proposal may be approved considering domestic sugar output which has reached more than 300 lakh tonnes so far in the 2023-24 season (October-September), which is sufficient to meet the demand and even retail prices are ruling stable.

Sugar production is estimated to be between 315-320 lakh tonnes in the ongoing 2023-24 season excluding diversion of 17 lakh tonnes.