Understand expected maths behind allocation: Government revises ethanol production guideline; caps sugar diversion to 17 LMT

The Government has softened its stand on the 7th December, 2023 notification banning sugar mills from producing ethanol directly from sugarcane juice/syrup.

In the latest directive issued on 15th December, the Government said the Oil Marketing Companies (OMCs) will issue a revised allocation of sugarcane juice and B heavy molasses-based ethanol for the 2023-24 Ethanol supply year (ESY) to each distillery. OMCs have been asked to inform the Food Ministry after the placement of revised contracts.

The notification says that on receipt of such communication from OMCs for the revised quantity of SCJ & BHM based ethanol as mentioned in the notification, all sugar mills and distilleries will supply ethanol strictly as per the revised quantity of SCJ & BHM ethanol.

In the month of October, 2023, the OMCs had issued a tender for 825 crore litres of ethanol for ESY 2023-24, allocating 265 crore litres from sugar-based feedstocks, including 135 crore litres from sugarcane juice/syrup and 130 crore litres from B-heavy molasses. This was translated into around 35 LMT sugar diversion. (This includes projected 23 LMT sugar for sugarcane juice based ethanol and 12 LMT sugar for B-Heavy molasses based ethanol).

Now following the Central Government’s revised order on 15th December 2023, it is expected that the Government may set a revised allocation of 155 crore litres of ethanol from sugar-based feedstocks, including 36 crore litres from juice/syrup and 119 crore litres from B-heavy molasses, with a capped sugar diversion of 17 lakh MT. (This includes expected 6 LMT sugar for sugarcane juice based ethanol and 11 LMT sugar for B-Heavy molasses based ethanol).

DFPD in a released order yesterday also said that no diversion of sugarcane juice and B Heavy molasses is allowed for production of Rectified Spirit (RS)/Extra Neutral Alcohol (ENA).

Disclaimer: The views and opinions expressed in the article by Dilip Patil, Managing Director of Samarth SSK Ltd., are solely his own.


  1. This is very positive for the Sugar Mills. But besides this, Sugar Mills can also expect the increase in Ethanol prices to neutralise effect due quantity limitation set by the Govt.


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