Sugar millers in Maharashtra have submitted bids for only Rs 22 crore for a tender placed by oil marketing companies (OMCs) for 58 crore litres of ethanol.
On a pan-India basis, oil companies placed tenders for 5.11 billion litres of ethanol in 2019-20 out of which sugar companies offered 1.63 billion litres of ethanol, 13.29 % less than in 2018-19 season as sugarcane output dropped and potable alcohol manufacturers offered better prices. Ethanol delivery season starts from December and ends in November. Sanjay Khatal, MD, Maharashtra State Cooperative Sugar Factories Federation (MSCSFF) pointed out that given the current crop situation in the state, the total molasses availability is limited.
“In our estimates, millers should have filled bids for 40-41 crore litres of ethanol but millers seem to be reluctant. In the first tender floated by OMCs for the season, millers have bid for only 17-18% of the given target.
Significantly, rectified spirit (RS) and extra neutral alcohol (ENS) are commanding higher rates. The second tender is likely to be floated in January—February next year and a clear picture may emerge till then.
“However, given the situation, the current rates of RS and ENS, supply is not likely to cross 35-36%,” Khatal said. Last year, of the total requirement of 86 crore litres in the state, millers supplied 58 crore litres of ethanol (around 67%). In 2018-19, OMCs wanted 3.3 billion litres of ethanol nationally out of which 2.45 billion litres were extracted and 1.88 billion litres of ethanol has been supplied to OMCs so far.
According to B B Thombare, president, Western India Sugar Mills Association (WISMA), ‘since the cane crop is 50% less this season,the availability of molasses is likely to be proportionately less’. The rates of molasses are in the range of Rs 8,000-9,000 per tonne. Significantly, the government has raised the ex-distillery price payable by OMCs for ethanol manufactured from ‘C’ molasses — the residual mother liquor after the maximum possible recovery of sugar from the cane juice — from Rs 40.85 to Rs 43.75 per litre.
Interestingly, RC rates are Rs 43-44 per litre and ENS rates are around Rs 55-58 per litre and therefore millers may not find it economically viable to produce ethanol, Thombare said. The ex-distillery realisations from extra neutral alcohol (ENA), which is what goes into potable country and Indian made foreign liquor, prices are even more at Rs 58-60 per litre, Thombare said. Both are produced by fermenting molasses, but the alcohol content is only 95% in RS and 96% for ENA. On the other hand, ethanol is alcohol of 99%-plus purity. Converting RS into ethanol costs about `5 per litre. It is more viable, then, to sell RS than ethanol, Thombare says.
The ethanol procured by public sector OMCs has increased from 38 crore litres in ethanol supply year 2013-14 to estimated 140 crore litres in 2017-18. In the 2018-19 ethanol production season, an estimated 200-225 crore litres of ethanol is expected to be supplied by sugar factories to OMCs against a total requirement of up to 340 crore litres. One-fourth of the supplies are expected to be produced from B-heavy molasses while the rest would come from the conventional C-heavy molasses, industry observers said.
Last season, surplus sugar production led to depressed sugar prices. Consequently, sugarcane farmers’ dues increased due to the lower capability of the sugar industry to pay the farmers. In 2018-19 (December-November period), it is expected that the blending rate should touch 5% for the first time. India’s ethanol capacity is estimated at 300 crore litres. Of this, 130 crore litres is consumed by the potable alcohol sector and 60 crore litres by chemical industries leaving about 110 crore litres for blending with petrol.