The sugar industry has contracted to supply 104 crore litres of ethanol between December this year and November 2016, compared with 78 crore litres a year before, which will result in a saving of almost Rs 5,000 crore of foreign exchange for the country, according to Indian Sugar Mills’ Association (ISMA). The savings will be in the form of less oil imports to that extent.
“We expect to contract more ethanol supplies in the next couple of months, as and when the expressions of interest are invited by oil marketing companies (OMCs),” ISMA president A Vellayan said, adding that the industry has responded well to the government’s call of mixing the cane by-product with petrol at the proposed 10:90 ratio.
In August, a study by McKinsey had said the country could potentially save as much as $1.7 billion a year if the proposed 10% blending programme is strictly implemented. Recently, OMCs have invited expression of interests seeking supplies of 266 crore litres for implementing the proposed 10% ethanol blending with petrol in 2015-16. The country could achieve only 1.4% ethanol blending with petrol in the last fiscal, even lower than the 2013-14 level of 2%.
“On behalf of the sugar industry, ISMA would assure the government that the industry will do its best to achieve the targets set by it for the industry on sugar exports and ethanol blending with petrol,” Vellayan added.
However, he added that state governments, which are not permitting production of fuel ethanol or delaying excise permissions or creating impediments on inter-state movements by imposing taxes and duties on such an important fuel, should be convinced to remove these impediments. Improved cash flow for the mills from the sale of ethanol will not just replace some of the imported petroleum and trim foreign exchange outgo but will directly benefit cane farmers.
Vellayan hailed some of the recent initiatives by the government such as adoption of a fixed pricing policy linked to sugarcane price for ethanol procurement (which has ensured quicker finalisation of offers); removal of excise duty on ethanol (which has given higher returns to mills/suppliers of around Rs 5 per litre); decision to move to 10% ethanol blending with petrol; announcement of interest free loan of around Rs 6,000 crore to the sugarcane farmers and timely decision in September to mandatorily export 4 million tonne of sugar, duly fixing an export quota for each sugar mill for exporting the same in the current season through September next year.
The decision to provide a subsidy of Rs 4.50 per quintal of sugarcane crushed during 2015-16, amounting to a total dole-out amount of Rs 1,147 crore, is first time ever that the centre has agreed to pay a part of the fair and remunerative price fixed by it.
“We would continue to request acceptance of the recommendations of the Commission on Agricultural Costs and Prices (CACP) for a revenue sharing or a cane price-sugar price linkage formula along with the Price Stabilisation Fund to bridge the gap between FRP and what the industry can pay,” Vellayan said.