The government’s decision to lift restrictions on use of sugarcane juice and sugar syrup for ethanol production from the next ethanol supply year (ESY) starting December 1 has resulted in significant rise in stock prices of sugar companies on Friday. Industry associations said that the move would allow higher blending of the biofuel with petrol and would still maintain sugar prices at a reasonable levels.
“The move by the government is expected to support the increase in ethanol blending with petrol (EBP) closer to the target of 20% for the year and higher than the estimated 14% in ESY2024-25,” Girishkumar Kadam, senior vice president and group head – corporate ratings, ICRA said.
He said it would help curtail the closing sugar stock for sugar season 2024-25 starting October 1. It would maintain sugar prices at a reasonable level, thereby supporting the profitability of sugar mills and enabling timely payment to farmers.
According to an official note, the blending percentage has touched 15.83% in July, 2024 and cumulative blending percentage has crossed 13% in the ongoing ESY 2023-24.
The stock prices of the major sugar companies in BSE rose between 3.46% to 8.6% on Friday compared to previous day.
The stock prices of Triveni Engineering and Industries rose by 8.6% to Rs 478.8.97 on Friday against Rs 439.05 on Thursday. Similarly shares of Balampur Chini, Shree Renuka Sugar and Dhampur Sugar, rose by 3.46%, 5.38% and 7.55% respectively on Friday.
“Lifting the restriction and allowing unrestricted ethanol production from sugarcane juice, B-Heavy Molasses, and C-Heavy Molasses for ESY 2024-25 is a significant relief for the industry,” Deepak Ballani, Director General, Indian Sugar and Bio-Energy Manufacturers Association (ISMA) said in a statement.
Under the ethanol blended petrol (EBP) programme wherein public sector oil marketing companies sell petrol blended with ethanol. Under the rogramme, the blending of ethanol with petrol increased from 38 crore litres in ESY 2013-14 to more than 500 crore litres in ESY 2022-23 with corresponding increase in blending percentage from 1.53% to 12.06%.
Cooperation minister Amit Shah recently said that the target of 20% ethanol blending by 2030, but ‘we will achieve this target much before by 2025-26,”.
The government on Thursday permitted the use of sugarcane juice and sugar syrup for ethanol production in the 2024-25 ESY, reversing last year’s ban.
In December, 2023, the government had imposed restrictions on diverting sugar for ethanol production aimed at increasing sugar output after the cane crop was hit by below-normal monsoon rains.
Industry sources said around 0.75 MT of B-heavy molasses are lying in stock with mills after the government restricted ethanol production from this feedstock last year.
According to an official note, the food ministry in coordination with the ministry of petroleum and natural gas, would periodically review the diversion of sugar to ethanol production vis-a-vis the production of sugar in the country, so that year-round sugar availability for domestic consumption is maintained.
According to the agriculture ministry, sugarcane sowing this season has been completed with a total sown area of 5.76 million hectare (MH), which is marginally higher than normal sown area compared to the previous year. According to ISMA, area under sugarcane this season is 5.6 MH, a 6% decline from previous season.