Maharashtra millers seek Centre’s nod to convert sugar to ethanol

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Published: August 2, 2019 1:44:27 AM

The Maharashtra State Cooperative Sugar Factories Federation has sought permission from the Centre to convert existing sugar stocks into ethanol, an additional alternate besides “C” Heavy Molasses, “B” Heavy Molasses and juice into ethanol.

In a representation made to PM Modi, Jayprakash Dandegaonkar, chairman of the federation pointed out that the cane available for crushing in the 2018-19 season in Maharashtra was 952.11 lakh tonne.

The Maharashtra State Cooperative Sugar Factories Federation has sought permission from the Centre to convert existing sugar stocks into ethanol, an additional alternate besides “C” Heavy Molasses, “B” Heavy Molasses and juice into ethanol.

In a representation made to Prime Minister Narendra Modi, Jayprakash Dandegaonkar, chairman of the federation pointed out that the cane available for crushing in the 2018-19 season in Maharashtra was 952.11 lakh tonne. As a result of the central government’s decision to permit “B” Heavy Molasses and juice to ethanol options , the molasses availability inclusive of 5.10 lakh tonne opening stock increased to 44.60 lakh tonne as against 41.25 lakh tonne i.e. a net gain of 3.25 lakh tonne.

Resultantly, Maharashtra will end up supplying 51.30 crore litre, 11.25 crore litre, 0.45 crore litre Ethanol through “C” Heavy Molasses , “B” Heavy Molasses and Juice options totalling 63 crore litre.

“However, the cane available for crushing in 2019-20 sugar season as projected by the Sugar Commissioner shall drastically reduce to 570 lakh tonne , a steep fall of about 40%. This is mainly because of reduced acreage in 2018-19 (which comes for crushing in 2019-20 ) severe drought conditions then leading to reduced storage water availability in dams and finally below average rainfall till the present in the ongoing monsoon leading to a consecutive drought in the second year,” he said.
Huge quantity of cane is getting diverted to fodder purpose and that apart from cane productivity of the available cane for crushing is expected to steeply reduce to about 70 to 75 lakh tonne, he added.

Resultantly, the availability of molasses will be severely impacted creating huge problems in ethanol supplies during 2019-20. It is estimated that even if a compulsion is made to switch to 100% “B” Heavy Molasses and Juice Options the availability of molasses will still be limited to 34.20 lakh tonne only as against 44.60 lakh tonne last year leading to a shortfall of around 10.40 lakh tonne (23%), Dandegaonkar explained.

“However, everyone shall not resort to “B” Heavy Molasses therefore the shortfall may further increase to 16 lakh tonne (36%). After factoring diversion for cattle feed and the requirements of potable liquor, pharma and chemical industries, the availability of ethanol will get restricted to 70 crore litre, 5 crore litre totalling 75 crore litre through the “B” Heavy Molasses and Juice routes separately. In case mills opt for “C” Molasses route , the ethanol supply shall further reduce,” he cautioned.

Dandegaonkar pointed out that oil companies are expecting a supply of 110 crore litre from Maharashtra to meet the E-10 mandate for states covering Maharashtra, Madhya Pradesh, Goa, Telangana, Tamil Nadu and Gujarat.

“Thus there will be a net shortage of 35-40 lakh litre of ethanol or even more. While Maharashtra shall be short of 16 lakh tonne plus molasses but overall the country and Maharashtra has huge surplus of sugar. Therefore, we can create a win-win situation by converting sugar to ethanol. Therefore, the Centre may permit an additional option of sugar to ethanol as fourth route over the three existing routes,” he said.

Dandegaonkar added that the conversion to ethanol will result in utilisation of 7 lakh tonne of existing sugar stocks to achieve 42 crore litre of ethanol which means liquidation of inventory and generation of cash flows.

“The reduced pressure on export of sugar leading to saving in government financial expenditure for assistance towards payment of FRP. This will also lead to maximum utilization of distillation capacities or else in the absence of adequate molasses they may have to operate at 55 to 60% capacity,” he felt. The diversion of sugar to ethanol will improve market price sentiments both nationally and internationally and help increase sugar prices thus narrowing the gap between sales price and cost of production, he said.

Moreover, this will also resolve the problem of storage capacity visi-a-vis the next crushing season commencing November 2019. Moreover, the permission to divert sugar to ethanol will reduce the cost of storage and interest burden of the sugar industry, he said adding that the savings could be to the tune of Rs 3-5 per kg. Disputes raised by sugar producing and exporting countries such as Brazil , Guatemala, Australia at the International WTO dispute forum could be amicably settled. More importantly, the import of ethanol from US to India as reported by the US Grain Council on July 12, 2019 can be successfully curbed, he said.

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