The food ministry has directed all sugar-producing states to ensure that 85% of the installed ethanol production capacity is used by the mills, as there are still huge sugarcane price arrears despite the government extending large scale fiscal assistance to the sugar industry.
The government has also set a mill-wise target of ethanol production for every mill that has a distillery attached to it, with an all India cumulative target of producing 362 crore litre ethanol in 2020-21. The oil marketing companies issued a tender on Thursday with a requirement of 465 crore litre of ethanol.
"There is excess availability of sugar in the country which has been continuously depressing the ex-mill sugar prices, which has adversely affected the realisation on sale of sugar, thereby affecting the liquidity of sugar mills, resulting in accumulation of cane price arrears of farmers. To improve liquidity position of sugar mills to enable them to clear cane price dues of farmers, the government has taken measures in sugar season 2017-18 and 2018-19 and current sugar season 2019-20, assistance to sugar mills to facilitate export of sugar, extending buffer subsidy, extending assistance for deferring expenditure towards internal transport, freight, handling and other charges on export of sugar extending soft loans to sugar mills through banks, extending interest subvention to sugar mills for augmentation of ethanol production capacity etc. ," the letter of the Food Ministry to the state government said.
To encourage mills to divert sugarcane to produce ethanol for blending with petrol, the government has also allowed production of ethanol from B-heavy molasses, sugarcane juice, sugar syrup and sugar. It has fixed remunerative ex-mill price of ethanol derived from c-heavy molasses at Rs 43.75/litre; from B-heavy molasses at Rs 54.27/litre and Rs 59.48/litre for ethanol derived from sugarcane juice/sugar/sugar syrup for ethanol season 2019-20 (December-November).
The government has fixed 10% blending targets for mixing ethanol with petrol by 2022 and 20% blending targets by 2030. During the last ethanol supply year 2018-19, about 180 crore litre of ethanol was supplied by sugar mills to oil companies, achieving a 5% blending target.
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