Rs 15K cr at risk due to sudden ban on cane juice for making ethanol: ISMA

Industry body ISMA on Friday said the "sudden" ban on the use of cane juice for ethanol will have an adverse impact on capacity utilisation of mills, putting at "risk" their Rs 15,000 crore investment in the last three years to set up plants for green fuel.

It also fears that there could be a delay in payments to sugarcane farmers.

The Centre recently banned use of cane juice for ethanol in view of likely drop in sugar production during 2023-24 marketing year (October-September).

Indian Sugar Mills' Association (ISMA) demanded that the government revise soon the prices of ethanol made from B-heavy and C-heavy mollases, a by-product of sugar, to improve the financial health of the millers.

"The sudden ban on use of sugar cane juice/syrup for ethanol in 2023-24 supply year with immediate effect, is a big deterrent for the sugar industry," ISMA President Aditya Jhunjhunwala said at its 89th annual general meeting.

The ban has put the industry in a difficult situation, he said, and urged the government to reconsider the same.

The price of ethanol from B-heavy and C-heavy molasses need to be revised and announced immediately as this would help mills cover the likely losses from the recent ban, Jhunjhunwala said.

"With the lowest sugar price in the world, no sugar export this year and ban on ethanol production from sugarcane juice, industry is facing difficulties to uphold its promise of timely payment to farmers," Jhunjhunwala said.

India exported 64 lakh tonnes of sugar in the 2022-23 marketing year. It has achieved 12 per cent blending of ethanol with petrol in 2022-23 supply year (November to October).

Jhunjhunwala said the total sugar production in 2023-24 is expected at 325 lakh tonnes (without diversion to ethanol) while domestic consumption is seen at 285 lakh tonnes.

He said the government is likely to allow diversion of 17 lakh tonnes of sugar for ethanol production in 2023-24 supply year.

Jhunjhunwala said there is a scope for diversion of another 17-20 lakh tonnes of sugar for ethanol.

He demanded that the government review the sugar production and ethanol supply around January 15 and take suitable decision.

Jhunjhunwala said the industry has invested about Rs 15,000 crore in the last three years for creating capacity for ethanol production and "this huge investment is at risk".

The ethanol production capacity has increased to 766 crore litres from 280 crore litres three years back.

The industry demanded that the price of ethanol made from B-heavy molasses be raised to Rs 64 per litre from Rs 59 per litre.

The rate for C-heavy molasses needs to be raised to Rs 58-59 per litre from Rs 49 per litre, they said.