Maharashtra State Co-Operative Sugar Factories Federation urges govt to increase ethanol prices amid procurement concern

In response to the recent government decision to restrict the use of sugarcane juice/sugar syrup for ethanol production, the Maharashtra State Co-Operative Sugar Factories Federation Ltd (MSCSF) communicated with the government and requested a resolution to ensure that the sugar industry is not significantly impacted.

Sanjay Khatal, Managing Director of MSCSF, in a letter written to Sangeet Singla, Director (Sugar), Department of Food and Public Distribution, has urged the government to make an immediate decision on the increase in prices of ethanol for the ESY 2023-24 with immediate effect so that sugar mills can plan the production program for the balance period more effectively, ensuring both the smooth supply of sugar and ethanol.

The letter mentioned, “The decision which has been suddenly taken could have been better decided before the commencement of the crushing operations for the Sugar Season 2023-24 as it could have enabled a proper production planning of both ethanol and sugar leading to a streamlined and smooth transition. There is a good amount of panic in the industry regarding the fate of the material, particularly the ethanol which has been produced till 07th December 2023 from the sugarcane juice / syrup route. Many of the sugar mills are having a stock of such ethanol produced with them as on 07th December 2023. In addition, and very importantly the sugar mills also have RS/alcohol produced from this route which is in storage for future conversion into ethanol in the off season. This raw material can-not be converted back into sugar and would necessarily have to be processed into ethanol. Further some of the mills are also having quantity of stored syrup which would also have to be converted into ethanol necessarily.”

“It is therefore important that as on 07th December 2023 the available stock of ethanol from the said route, the available RS/alcohol from this route which can be converted into ethanol only and finally the syrup which also would have to be got converted into ethanol needs to be all factored in and taken bv the OMCs necessarily. We are in the process to gather this information from our member mills. However it will also serve important purpose for DFPD to seek information directly from the mills for due necessary,” the letter further added.

In the tender of the OMCs for ESY 2023-24 many of the mills have submitted quantities restricted to the sugarcane juice / syrup to cthanol route only. The detailed position in so far as Maharashtra against the 1st and 2nd quarter allocation for the tender is as follows:

Khatal said in the letter, “After factoring in the supply already made it will be important for the Government to convert the balance quantity which can-not be supplied for this route ‘i.e. Juice/Svrup to ethanol’ for supply under the B-Heavy category in order to ensure that the ethanol programme of the Government does not get adversely destabilized and the financial implications both for the sugar mills as well as financial institutions which have funded the ethanol project does not get seriously impacted. In absence of this the FRP payments to farmers shall get seriously jeopardized leading to mass scale complaints and protests.”

MSCSF has asked for the following important request to take note of for due resolution:

  1. The decision for an increase in prices of ethanol for ESY 2023-24, as pointed out above, may be taken immediately.
  2. A moratorium period of 3 years for the loans availed for setting-up the ethanol plants to ensure that accounts of sugar mills do not enter into the red zone of NPAs as a result of the inability of the sugar mills to honor regular installments.
  3. Increase in the repayment period by 3 years for the installments against the loans availed by the sugar mills for setting-up of the ethanol plants.

MSCSF also requested the government to direct RBI and NABARD to ensure suitable policy and instructions thereof in the matter to the banks/financial institutions.

Government in a notification released on December 7, 2023, directed to all sugar mills and distilleries not to use Sugarcane Juice/Sugar Syrup for Ethanol in ESY 2023-24 with immediate effect. Supply of ethanol from existing offers received by OMCs from B-Heavy molasses will continue.

The Roadmap for Ethanol Blending in India 2020-25, prepared by an inter-ministerial committee, estimated an ethanol requirement of 1,016 crore litres to achieve 20 per cent blending targets in ESY 2025-26. In line with the roadmap, oil marketing companies have achieved 10 per cent ethanol blending during 2021-22 and 12 per cent during 2022-23.



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