Ethanol production capacity may increase to 375-400 cr litres: ISMA

The production capacity of ethanol in the country will be more than double of 710 crore litres contracted by the manufacuturers/sugar mills with oil marketing companies (OMCs) for ethanol blending programme (EBP) in the ongoing season 2019-20 (Dec-Nov).

However, the Government of India is targeting an ethanol production and supply target of 300-350 crore litres in 2020-21, and achieve 7.5-8 per cent ethanol blend levels with petrol, the ISMA said in a statement.

"As laid down in the National Biofuels Policy, 2018, the government intends to achieve ethanol with petrol blend levels of 10 per cent by 2022 and 20 per cent by 2030, and therefore, efforts are being made to achieve the targets," the statement said.

Against this, 92.5 crore litres of ethanol have already been supplied to the OMCs between December 1 2019 and June 22, 2020, achieving an average all-India blending of 5.09 per cent with petrol. The blending levels achieved in some states like UP, Haryana, Punjab, Uttarakhand, Bihar and Karnataka is much higher at 8.5 per cent to 9.8 per cent with petrol.

B-heavy molasses and sugarcane juice have been diverted away from sugar, to manufacture and supply 58 crore litres of ethanol to OMCs from in the current ESY up to June 20. As per the contracts entered into by the sugar mills across the country, another 23 crore litres of ethanol will be manufactured from B-molasses and cane juice for supply in the balance period up to November 30, 2020.

This use of B-molasses and cane juice in production of ethanol, and not for sugar production, will result in a diversion of sugar of around 8 lakh tonnes, the ISMA said.

The diversion will not only reduce surplus sugar availability in the country, but also reduce the carrying costs for the sugar mills. It will also give better returns to the mills because ethanol prices fixed by the government are more remunerative than sugar currently, besides giving them better cash flows because of immediate sale of ethanol as compared to delays in the sale of sugar, which could be stuck in the godowns for more than 10-12 months.

Despite the fall in petrol consumption/sales during the lockdown period, the supplies of ethanol were not too badly affected, and sugar mills have been able to supply as per the contracts during the lockdown too, said ISMA.

Accordingly, the blend levels have been maintained at an all-India average of 5 per cent for the country. This could happen because of the good understanding and cooperation between the OMCs and the sugar mills/ethanol manufacturers, when they together agreed to relocate ethanol supplies from depots that were full to other depots and even to distant states, where there was hardly any ethanol being supplied, and therefore there was tankage capacity to take the reallocated ethanol supplies, said the statement.