Alcohol to rescue cash strapped sugar mills

NEW DELHI: The government on Wednesday hiked the price of ethanol produced from C-molasses — the end product in a raw sugar factory — by Rs 2.85 a litre to Rs 43.70 for the new season starting December 2018. It also fixed the price of ethanol made from B-molasses at Rs 47.49 per litre.

Molasses is a viscous product resulting from refining sugarcane or sugar beets into sugar.

This step will benefit the sugar mills as they have been demanding an increase in the price of ethanol (ethyl alcohol) which they supply to oil marketing companies (OMCs). An excess supply of sugarcane in India has caused a drop in sugar price, leaving the sugar mills cash strapped. By selling ethanol to OMCs, mills expect to earn over Rs 5,000 crore during the 2017-18 sugar season.

To promote alternative fuel, and to reduce India’s oil import burden, the government in 2003 proposed doping petrol with ethanol — up to 5 per cent. The government is now considering to raise the ethanol blend to 10 per cent – which translates to a demand of 313 crore litres of ethanol.

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Given the glut, India should produce alcohol directly from sugarcane juice – to make this commercially viable, the Government should notify sugarcane prices based on the ethanol pricesBipin Kochar

Facing cash crunch, sugar mills have been struggling to pay sugarcane farmers in India this year, with the arrears reported to be as high as Rs 14,000 crore by January end. The income from selling ethanol will trickle down to the farmers.

The sugar industry had demanded a higher ethanol price to improve the liquidity of cash-starved mills and enable them clear cane arrears that have crossed Rs 22,000 crore.

Source: Times of India – Published on: 28th June 2018

Alcohol to rescue cash strapped sugar mills