Agriculture Industry

Govt raises ethanol procurement price, but sugar industry says not enough

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03 November 2022, New Delhi: On Wednesday, the Cabinet Committee of Economic Affairs, chaired by Prime Minister Narendra Modi, approved a hike in ethanol procurement price.

According to a press statement, for the December- November Ethanol Supply Year (ESY) 2022-23, oil marketing companies will procure ethanol produced from sugar juice or syrup at Rs 65.61/lire as against the existing price of Rs 63.45/litre. Mills will be able to command a price of Rs 60.73/litre for ethanol manufactured from B heavy molasses which, till date, was being procured at Rs 59.08. The highest rise of Rs 2.75/litre was reserved for ethanol manufactured from C molasses, whose procurement price will now be Rs 49.41/litre as against the existing price of Rs 46.66

Ethanol, a fuel additive, is derived as a by-product of sugar production. Depending on the manner in which it is manufactured, the central government has announced a varied procurement structure. The highest price was for ethanol manufactured from juice or sugar syrup while the one manufactured from C molasses was at the lowest price. This was done to incentivise the production of ethanol and reduce production of sugar by mills.

C molasses is obtained when maximum sugar is already derived from the juice while B heavy molasses as a feed stock will result in lower sugar production than C molasses. In June this year, the country achieved its target of 10 per cent blending of petrol with ethanol. The central government had subsequently moved forward the target date of 20 per cent blending to Ethanol Supply Year (ESY) 2025-26 as against the previous target of 2030. The decision to give the highest price rise to ethanol manufactured from C molasses was contrary to the intentions of the government to keep production of sugar in check and incentivise production of ethanol, said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories Association.

“India links ethanol prices to the Fair and Remunerative Price of cane and thus this price rise was expected,” he said, adding that the rise was not in accordance with the cost of production.

Sonjoy Mohanty, director general of Indian Sugar Mills Association, said, “The price of Rs.65.61/litre announced by the government today will still make the investors shy away… We will request the government to have a re-look and increase the price of ethanol procured from sugar juice/syrup.”

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