The shift in sugar economy from a situation of shortage to self-sufficiency will ensure adequate availability of ethanol for blending with petrol. The chemical industry, however, still fears that there could be a dearth of industrial alcohol for its consumption.
“Molasses production has moved up. Ethanol blending at 5 per cent this year and 10 per cent next year can continue without any problem. There will be adequate availability of alcohol for all consumers. Also, with higher sugarcane crushing bagasse availability will improve and help in generation of power,” said Vivek Saraogi, managing director, Balrampur Chini and president of the Indian Sugar Mills’ Association.
Ethanol blending at 5 per cent continued for about two years before coming to a halt in October last year due to low supply. The sugar industry was also demanding a higher price. A group of ministers has now approved an interim price of Rs 27 a litrea against the Rs 21.50 fixed for three years ending September 2009. The final price will be decided by a committee headed by Planning Commission member Saumitra Chaudhuri.
“The revival of the sugarcane crop will be good for ethanol supply. Blending can now resume and it can go up to 10 per cent. Now that the government has indicated a stable price, it will help us plan investments and manage raw material for ethanol,” said Narendra Murkumbi, managing director, Shree Renuka Sugars, a leading sugar and ethanol producer.
Alcohol-based chemical industry, represented by India Glycols and Jubilant Organosys, however, protested against a fixed price of ethanol. “Price of ethanol should be decided on an import parity basis, which is currently in the range of Rs 18-20 a litre. The sugar industry supplied only 40 per cent of the quantity they committed in a year when sugar output touched a record 28 million tonnes in 2006-07 and 26 million tonnes in 2007-08. How will they supply 100 per cent with a production of 23 million tonnes?” asks Rakesh Bhartia, chief executive officer, India Glycols.
Murkumbi, however, alleged the chemical industry was against ethanol blending since they want their raw material (alcohol) at a throwaway price. “The chemical industry is also our customer. If they are worried about supplies, they should enter into long-term purchase agreements with us,” he said.
The oil marketing companies are ready to resume ethanol blending. “Once we get a formal intimation of the new price, we will start the procurement process and resume blending,” said G C Daga, director (Marketing), Indian Oil Corporation.
Domestic sugar output fell from 26.3 million tonne in 2007-08 to 14.7 million tonne in 2008-09. The dip resulted in a significant decline in availability of molasses, the raw material for alcohol. However, with production improving to 18.5 million tonnes in 2009-10, alcohol production has improved.
Alcohol production from molasses is estimated at 2,000 million litres while another 300 million litres would come from processing of grains, taking the total to 2,300 million litres.
Considering an offtake of 1,000 million litres by the alcohol industry and 400 million litres by the chemical industry (excluding 400 million litres imports), a quantity of 900 million litres is excess — more than the ethanol demand of 800 million litres for 5 per cent blending. However, the situation could turn tight when blending is raised to 10 per cent, said experts.
