 "OMCs hike procurement price of ethanol produced from C-heavy molasses")
In a major relief for sugarcane-based ethanol makers, oil-marketing companies (OMCs) have announced a Rs 6.87 per litre increase in the procurement price of ethanol produced from C-heavy molasses for the 2023-24 season, which started in November -- the highest increase in more than five years.
After the increase, the procurement price of ethanol produced from C-heavy molasses would be Rs 56.28 per litre as against Rs 49.41 per litre in the 2022-23 procurement season.
The increase comes weeks after the Centre stopped sugar mills from producing ethanol from sugarcane juice or syrup for the 2023-24 season owing to questions over India’s sugar production.
The sugar marketing season runs from October to September.
In 2022-23, in the just concluded ethanol supply year of 2022-23 (December-October), sources said of the 4.94 billion litres of ethanol supplied to the OMCs, a quarter came from sugarcane juice or syrup, 2.33 billion litres (around 47 per cent) came from B-heavy molasses, while the rest, around 1.30 billion litres, came from grain-based sources.
C-heavy molasses contributed 0.06 billion litres.
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The move to increase the price steeply is also meant to boost the production of ethanol from C-heavy molasses, for which the diversion of sugar is the least.
In the 2023-24 ethanol supply year, sources said of the 5.62 billion litres promised for OMCs, around 2.69 billion litres would come from sugarcane-based molasses and 2.92 billion litres from grains.
India’s net sugar production (after accounting for diversion for ethanol) in the 2023-24 season is estimated to be around 29 million tonnes, down from the 33 million tonnes last year.
In India ethanol is produced from multiple sources. It is largely through sugarcane-based molasses, or based on grains and other sources.
In sugarcane it is either through sugarcane juice or syrup, and then come B-heavy molasses and C-heavy molasses.
According to industry players, when ethanol is produced from sugarcane juice or syrup directly, the maximum amount of sugar is lost or diverted for making ethanol.
This percentage of loss or less production is lower when ethanol is produced from B-heavy molasses.
Then there is ethanol produced from C-heavy molasses, where no sugar is absorbed in the process. Therefore, when sugar production is expected to be marginally more than consumption in the 2023-24 season, the government, according to industry players, has decided against any further diversion of sugar for making ethanol.
In 2023-24, sources said, 1.6-1.8 million tonnes of sugar could be ploughed back to supplies, by the order of the government, to stop sugar companies from supplying ethanol made from juice and syrup.
“The industry appreciates the incentive of Rs 6.87 per litre on supply of ethanol from C-heavy molasses, which takes the price to Rs 56.28 per litre. However, it should be further increased to help the industry navigate better in these uncertain times and ensure timely cane price payments, mitigate losses and augment ethanol production,” said M Prabhakar Rao, president, Indian Sugar Mills Association.
Rao reiterated the industry’s appeal to ban the export of molasses with immediate effect.
Uppal Shah, co-founder and chief executive officer, AgriMandi.live Research, welcomed the announcement made by OMCs.