Maharashtra was able to supply barely 3 crore litres of ethanol for 2016-17 to Oil Marketing Companies (OMCs) as opposed to the the record supply of 38 crore litres in 2015-16, owing to a poor crushing season. The factories had bid for tenders worth 7.27 crore litres in 2016-17. As a result, several distilleries in the state had to forfeit their deposits to OMCs for their inability to fulfill their commitment to the OMCs who also blacklisted these companies, top officials of the Western Indian Sugar Mills of India (WISMA) said. A WISMA delegation recently met union oil minister Dharmendra Pradhan with a demand to refund the deposits of these distilleries because the companies were not able to fulfill their commitment owing to natural calamities. Unavailability of molasses because of poor cane production was cited as the main reason for the failure of the distilleries. B B Thombre, president, WISMA pointed out that Maharashtra crushed 40% less cane for the season of 2016-17 as a result of which the total production was hit.
Consequently, factories and distilleries in the state were unable to meet over 90% of the demand. “Moreover, ethanol prices went down by Rs 6 per litre because of the reinstatement of the excise duty to the tune of 14.5%. Prices went down to Rs 39 per litre as against the previous price of Rs 45 per litre. The government should bring back the prices to the previous level of Rs 45 per litre. OMCs this year will not pick up ethanol from these distilleries since they were unable to meet their commitments,” he said.
The Fair and Remunerative Price (FRP) was increased by the Centre by 11% and sugar prices are decreasing, he said, adding that if sugar prices go on decreasing, it will be difficult for the government to make cane payments to farmers, he said.Maharashtra has 68 ethanol manufacturing plants with a total production capacity of 72 crore litres. Moreover, factories receive only 80 paise per kilolitre per kilometer as transportation costs of ethanol as opposed to conventional fuel.
Since ethanol is a biofuel and saves the country precious forex, the government should grant special concessions and offer better rates for ethanol, he said. WISMA has recommended that ethanol should be excluded from GST on the same lines as other petroleum products. A large number of distilleries, especially in drought-hit areas in Maharashtra, had shut their operations due to viability issues. Since molasses prices had surged by 90-95% to trade currently at Rs 8,000 a tonne, compared to Rs 4,500 last year, ethanol production had become unviable. Existing large distilleries, however, were procuring molasses from independent sugar mills for ethanol manufacturing. During the cane crushing season 2015-16, OMCs were to lift 13,000 lakh litres ethanol from sugar mills but only 11,100 lakh litres were supplied. OMCs were able to achieve only 4.15% of blending.