OMCs are increasing the purchase price of ethanol produced from C-heavy molasses
In a major relief to sugarcane-based ethanol producers, the Oil Marketing Companies (OMCs) have announced an increase of Rs 6.87 per liter in the procurement price for ethanol produced from C-heavy molasses for the 2023-24 season that started in November. highest increase in more than five years.
After the increase, the procurement price of ethanol produced from C-heavy molasses would be Rs 56.28 per liter as against Rs 49.41 per liter in the 2022-2023 procurement season.
The hike in procurement price comes weeks after the Center stopped sugar mills from producing ethanol from sugarcane juice or syrup for the 2023-2024 season amid questions over India's sugar production in the 2023-2024 season.
The sugar marketing season runs from October to September.
In the 2022-2023 season, in the just concluded ethanol supply year 2022-23 (December-October), sources said that of the 4.94 billion liters of ethanol supplied to the OMCs, a quarter, estimated at around 1.26 billion liters , came from sugarcane juice or syrup as feedstock, while 2.33 billion liters (about 47 percent) came from B-heavy molasses, while the rest, about 1.30 billion liters, came from grain-based sources.
C-heavy molasses contributed 0.06 billion liters of the total ethanol supplied to OMCs in 2022-23.
The move to sharply increase the price is also intended to boost ethanol production from C-heavy molasses, where the least amount of sugar is diverted.
According to sources, of the 5.62 billion liters of ethanol promised to be supplied to the OMCs by ESY during 2023-2024, about 2.69 billion liters would come from sugarcane-based molasses, while 2.92 billion liters would come from grains would come.
India's net sugar production (after deducting ethanol diversion) in the 2023-24 season is estimated at around 29 million tonnes, up from 33 million tonnes last year.
Ethanol is produced in India from multiple sources.
It is largely due to molasses from sugarcane or grain-based and other sources as raw material.
In sugar cane this is done via sugar cane juice or syrup, then through B-heavy molasses and C-heavy molasses.
According to industry players, when ethanol is produced directly from sugarcane juice or syrup, the maximum amount of actual sugar is lost or less is produced.
This percentage loss or production is smaller when ethanol is produced from B-heavy molasses.
Then there is ethanol produced from C-heavy molasses, which does not incorporate any sugar during the process.
Therefore, when actual sugar production is expected to be only marginally more than consumption in the 2023-2024 season, the government, according to industry players, has decided in its assessment that actual sugar will continue to be used for making ethanol.
In 2023-2024, sources said around 1.6 to 1.8 million tonnes of sugar could be plowed back into total stocks following government orders to stop sugar companies from using ethanol from juice and syrup.
“The industry appreciates the incentive of Rs. 6.87 per liter on supply of ethanol from C Heavy Molasses, taking the price to 56.28 per litre. However, I am also of the view that it should be further increased to keep the industry to help better navigate these uncertain times and ensure timely cane price payments, limit losses and help increase ethanol production. Not to mention the high stakes the industry pays for investments in increasing the ethanol production capacity which is now not being fully utilized,” M Prabhakar Rao – This has been said by the President of ISMA.
Rao also reiterated the industry's call for a ban on molasses exports with immediate effect and the fact that we are waiting for a further increase in the price of ethanol from B Heavy Molasses and Sugar Cane Juice.
First print: December 29, 2023 | 3:18 PM IST