In a recent development, the central government has granted permission for the production of ethanol from B Heavy Molasses, following a series of deliberations and negotiations with industry stakeholders.
The decision comes after a review conducted by the central government in December 2023, which highlighted the anticipated low availability of sugar in the country. This forecasted scarcity was expected to lead to a surge in sugar prices in the local market, particularly in the lead-up to the general elections.
Consequently, on December 7, 2023, the central government imposed a ban on the production of ethanol from sugarcane juice/sugar syrup extract as well as from B Heavy Molasses, causing widespread concern within the sugar industry.
Responding swiftly to the industry’s concerns, the National Federation of Cooperative Sugar Factories (NFCSF) engaged with the central government to address the issues arising from the ban. Subsequently, on December 15, 2023, the government amended its order, granting partial relief to sugar factories with distillation projects across the country.
This amendment allowed these factories to utilize their remaining stock of ethanol and a portion of B Heavy Molasses for ethanol production, with a cap of 17 lakh tonnes of sugar diverted for ethanol production.
Moreover, favorable weather conditions in December, January, and February led to increased sugarcane yields in key producing states such as Maharashtra, Karnataka, Gujarat, and Tamil Nadu, resulting in a surplus sugar availability of 20 to 25 lakh tonnes compared to previous estimates, says NFCSF in a release.
Capitalizing on this surplus and the stock of unutilized B Heavy Molasses in sugar factories, the NFCSF, under the leadership of its President, Shri Harshvardhan Patil, submitted a request to the Group of Ministers headed by Union Home and Cooperative Minister, Shri Amit Shah, on February 24. The request outlined revised surplus sugar availability data and urged the government to permit the use of unutilized B Heavy Molasses for ethanol production.
Following thorough consideration, the central government’s concerned ministerial departments swiftly moved to grant permission for the use of approximately 7 lakh tonnes of remaining B Heavy Molasses for ethanol production. Additionally, on the advice of the Food Ministry, the Petroleum Ministry initiated the process of allocating additional ethanol to individual distilleries based on their physical stock of B Heavy Molasses as of March 31, 2024.
As a result of these measures, approximately 3.25 lakh tonnes of surplus sugar will be diverted to ethanol production, yielding an estimated 38 crore liters of ethanol at a cost of Rs. 2300 crore. This decision is expected to alleviate sugar stocks and subsequently enhance the local sugar selling rate.
In response to the government’s decision, Harshvardhan Patil expressed gratitude, stating, “This comforting decision will release around Rs 700 crore stuck in the remaining stocks of B Heavy Molasses in the mills. And from the sale of 38 crore liters of ethanol produced, about Rs 2300 crore will be available to factories with distillation projects across the country so that farmers can be paid timely and fully.”