Sugar industry welcomes government’s support for ethanol production

The sugar industry has welcomed the support from the Central government to boost the ethanol sector in the country.

According to the Indian Sugar Mills Association (ISMA), the sugar industry is happy to note that the RE (revised estimate) of 2021-22 FY, now increases the budgetary allocation for the industry by about Rs. 2507 crore as compared to the BE (budget estimate) (i.e. up from about Rs. 4337 crore to Rs. 6844 crore), primarily to settle claims of sugar mills under schemes for assistance to sugar mills for 2019-20 and export assistance for 2020-21 season. This is a positive decision being taken by the government as almost all these payments are to be made to the sugarcane farmers and therefore will directly reduce the cane price arrears and benefit the farmer community directly.

In a move to support Ethanol Blending Program (EBP), the government has kept a provision of Rs.160 crore in the RE 2021-22 and another Rs.300 crore in BE 2022-23 for extending financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity. This will give further boost to setting up of more ethanol distilleries in the country, which in turn will help reduce the surplus sugar and also increase ethanol supplies for ethanol blending with petrol to meet the target set by the government, thereby reducing the net oil import bill of the country and also improving air quality.

In addition to above, the government has also decided to impose an additional differential excise duty of Rs 2 per litre on unblended fuel from October 1st, 2022.

As per the notification No. GSR 90(E) of Department of Revenue dated 1st February 2022, fuel to be categorised as blended fuel (with ethanol/ methanol) has to conform to BIS specifications from time to time. As the blending currently is @ 10% ethanol with petrol, the demand and actual offtake from OMCs will improve to ensure that they achieve the blended fuel percentage, and thereby avoid the additional excise duty Rs.2 per litre on unblended petrol. This will further encourage the Ethanol Blending Program (EBP) of the government and increase offtake.

Meanwhile, OMC’s have issued the 4th cycle of EOI on 31st January,2022 indicating a requirement of about 95 Crore ltr of ethanol for procurement during ESY 2021-22. As noted from the quantity required, it appears that it has been apparently calculated considering 11% blending. This is another very positive move which will help in enhancing the ethanol supplies thereby diverting more of surplus sugar. Last date for submission of bids is 4th February, 2022.



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