The move comes in the wake of the surplus production and excess availability of sugar, which has been continuously depressing ex-mill prices.
The Centre has advised sugar millers to divert excess sugarcane or sugar to produce fuel-grade ethanol. The move comes in the wake of the surplus production and excess availability of sugar, which has been continuously depressing ex-mill prices.
In a note written to the principle secretaries and cane commissioners of sugar producing states, the Department of Food & Public Distribution (DFPD) under secretary Jitendra Juyal pointed out that excess availability of sugar has adversely affected the realisation of sale of sugar, thereby affecting liquidity of sugar mills resulting in accumulation of cane price arrears of farmers.
To support sugar sector and to encourage sugar mills to divert excess sugarcane to produce ethanol in the interest of sugarcane farmers and sugar industry, soft loans of about Rs 18,600 crore are being extended through banks to 362 projects (349 sugar mills and 13 molasses-based standalone distilleries) for enhancement and augmentation of ethanol production capacity, for which an interest subvention of about Rs 4,045 crore for five years is being borne by the government.
However, out of 349 sugar mills who have been granted in-principle approval by DFPD so far, only 166 sugar mills have submitted their applications to banks. Sugar mills should, therefore, come forward and submit their applications to banks for availing loans for augmentation of their ethanol production capacity and divert excess sugarcane to fuel grade ethanol, the under secretary said.
At present, even the installed capacity for production of ethanol has not been fully utilised by the sugar mills/distilleries, he pointed out. Therefore, sugar mills should utilise their existing capacity to produce ethanol. Sugar mills with distillation capacity should divert B-heavy molasses and sugar syrup for producing ethanol to utilise their capacity to maximum extent. Those sugar mills which do not have distillation capacity should produce B-heavy molasses and should tie up with distilleries which can produce ethanol from B-heavy molasses, Juyal advised.
To encourage sugar mills to divert excess sugarcane to produce ethanol for blending with petrol, the government has also allowed production of ethanol from B-heavy molasses, sugarcane juice, sugar syrup and sugar. It has also fixed the remunerative ex-mill price of ethanol derived from C-heavy molasses at Rs 43.75/litre, from B-heavy molasses at Rs 54.27/ litre and at Rs 59.48/litre for ethanol derived from sugarcane juice/ sugar/sugar syrup for ethanol season 2019-20 (December- November).