Despite sustained increase in demand, sugar companies have cut the ethanol production target by a little over eight per cent, due to reduced availability of cane likely during the crushing season beginning October.
While ethanol production of individual companies would depend on the availability of cane for crushing and overall recovery from these, accumulative production of the green fuel is forecast to remain at 2,512 million litres during the sugar season 2012-13, as compared to a record 2,732 mn litres during the previous season.
This would raise the supply deficit to the largest in four years, at 661 mn litres in the ensuing crushing season, as compared to 233 mn litres in the previous year. This is set to hamper the government’s plan to make five per ethanol blending with petrol mandatory, to be expanded later to 10 per cent.
Being a valuable byproduct of cane crushing, ethanol production also depends upon overall processing of cane and average recovery of sugar during the season.
“Ethanol is primarily produced using sugarcane molasses, directly dependent on the cane crushed by the sugar mills. Due to the cyclical nature of the sugar industry, huge fluctuation has been observed in the availability of molasses, a byproduct of sugar which is later processed to make ethanol, thereby disrupting supply for the blending programme,” said Revati Kasture, head of CARE Research.
In sugar season 2010-11, cane production and crushing volume by sugar mills increased by 16 per cent and 29 per cent on an annual basis, respectively.
Despite surplus cane production, the country was not successful in achieving the target of five per cent ethanol blending. To do so, it would have required about 1,100 mn litres of ethanol in sugar season 2011-12. It is estimated the industry will be able to meet only 80 per cent of this demand.
Total production of molasses in India was 1.25 million tonnes during the last sugar season. With the lower cane output estimated this year, total molasses output is set to be 1.1 mt. A proportionate decline in ethanol cannot be ruled out, said a senior official with the Indian Sugar Mills Association.
Ethanol is also used extensively by the chemical industry and manufacturers of potable alcohol.
Due to the higher prices offered by the chemical industry and potable alcohol manufacturers, sugar mills have been diverting ethanol to these users. Currently, oil marketing companies are offering Rs 27 a litre of ethanol as against Rs 34 a litre offered by the other competitive users.
“Also, sugar mills are abundantly exporting molasses at an average price of Rs 35 a litre. Today, extra neutral alcohol or potable alcohol, a pre-refined stage of ethanol, is sold at Rs 42-43 a litre, which makes business sense for sugar mills to divert molasses either for potable alcohol or for industrial uses, which chemical companies always look for. Sugar mills exported around 600,000 tonnes of molasses last year,” said Deepak Desai, an independent consultant for the ethanol industry.
Ethanol can be produced through fermentation, using the cane crop.
In India, molasses, the by-product of cane derived during the process of manufacturing sugar, is used as a feedstock for producing ethanol. The cane-based ethanol can be produced by three different routes — directly from cane juice, from B-grade molasses or from C-grade molasses.
Sugarcane planting is estimated to be 5.3 mn hectares and production at 34.2 mt, marginally less than last year.
