Ethanol supplies set to rise this season Sugar mills seen commissioning new capacity; offtake by OMCs too likely to pick up

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24 January 2022, New Delhi: With the government adopting a go-green approach, the focus on India’s ambitious ethanol blended programme to bolster the country’s energy security has gained momentum. Ethanol supplies from sugar sector are set to rise during the year as mills are seen commissioning about 4-5 new distilleries or expanded units every month from January. 

Besides, the sugar industry expects the pace of ethanol lifting by public sector Oil Marketing Companies (OMCs) to pick up in the months ahead. Under the programme, the OMCs have tendered for ethanol requirement of 459 crore litres in the current Ethanol Supply Year (ESY) 2021-22 (December-November) and have issued Letter of Intent for 369.4 crore litres as on January 16. The ethanol supply has begun and OMCs have received 41.4 crore litres till January 16, an oil company official told BusinessLine.

“We have achieved around 8.6 per cent so far in the current season from December 1. We expect the pace of lifting to improve further,” said Abinash Verma, Director General, Indian Sugar Mills Association (ISMA), the apex trade body for the sector.

Bidding for more quantities

Over the next fortnight, the sugar mills are expected to get a good idea on the cane availability for the ongoing crushing season and are expected to bid for more quantities, Verma said. Besides, with the new capacity addition that’s expected in the months to come, there’s expected to be bidding for more quantities by the mills in the upcoming tenders.

“From January onwards, there will be 4-5 new distilleries coming up every month. This would also include expansion of some existing units,” Verma said.

In the sugar sector, around 70-75 new units with an estimated capacity of around 188 crore litres are likely to be operational in the current ESY 2021-22. The estimated capacity in ESY 2020-21 stood at 519 crore litres from some 239 units. Of these 237 units, 104 were in Maharasthra, 52 in Uttar Pradesh and 29 in Karnataka.

Grain-based projects

Meanwhile, the Centre has recently approved 196 grain-based ethanol projects of 859 crore litre. In the ESY 2020-21 that ended in November last year, 85 per cent of the ethanol supplies came from the sugar sector and the rest from the grain-based projects. Meanwhile, some of the sugar mills are also expanding into grain-based projects to improve their operational capacities throughout the year.

Keeping pace with the trend, India Inc has sought lower customs duty on ethanol in the upcoming Budget. As part of pre-Budget recommendations, CII has suggested certain incentives and a policy roadmap for the bioenergy sector. This includes concessional import duty of 2.5 per cent on ethanol be brought back to provide feedstock for the domestic industry at better rates. CII has sought clarification for concessional duty that was applicable on ethanol imported for use in manufacture of chemical products during the period from July 1, 2017 till February 1, 2021. 

Also Read: Union Budget 2022-23: Transformation Agriculture through irrigation and win back India’s farmer

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