The Centre has hiked ethanol prices, with a special incentive for ethanol directly produced from 100% sugarcane juice, in a dual bid to reduce both surplus sugar production and the fuel import bill. The ethanol produced from sugar is blended with petrol.
The decision was taken by the Cabinet Committee on Economic Affairs at its meeting on Wednesday.
Surplus sugar production has been depressing sugar prices, noted Oil Minister Dharmendra Pradhan at a press briefing to announce the CCEA’s decisions. Record production of more than 31 million tonnes this year is far higher than domestic consumption rates of 25 million tonnes. As a result, sugar mills have struggled to pay their dues to cane farmers, and despite various government measures to improve liquidity, the arrears to farmers stand at more than Rs. 13,000 crore.
“Paying remunerative prices to ethanol suppliers will help in reduction of cane farmers’ arrears, in the process contributing to minimising the difficulty of sugarcane farmers,” said Mr. Pradhan.
The price of ethanol derived from 100% sugarcane juice is raised from ₹47.13 to ₹59.13. The rate for ethanol produced from B-heavy — or intermediary — molasses has been raised to ₹52.43. The rate of ethanol produced from C-heavy molasses (which has no sugar left), however, has been marginally reduced to ₹43.46.
By increasing the price difference between ethanol with no sugar left and that of fully made up of sugar to almost 35%, the Centre has given sugar mills a clear incentive to increase ethanol production from sugar. In fact, oil marketing companies have been told to prioritise ethanol from 100% sugarcane juice followed by B-heavy molasses, said a statement. The companies will also pay GST and transportation charges, it added.
Industry hails decision
Industry lobbyist Indian Sugar Mills Association welcomed the move.
“[This] is one of the best steps taken by the Government to achieve the dual objective of encouraging more production of ethanol as well as of reducing some of the surplus sugar. This price will compensate for the loss in revenue from the sugar sacrificed,” said Abinash Verma, director general, ISMA.
