Sugar industry seeks realistic price for ethanol

Willing to produce directly from sugarcane which helps bail out cash-strapped mills

Hyderabad: The Union Government’s proposal to raise ethanol blending with fuel by 10 per cent from its present mandate of 5 per cent has received a big thumbs-up from the sugar industry here.

This is particularly as they opine that the move could enhance production capacity, albeit if the revised price becomes viable. “It is a welcome decision. However, we want the government to extend a viable price structure for ethanol so that we could sustain,” reasons Venkateswar Rao, COO, KCP Sugars.

The industry has been waiting for an ethanol production policy whereby the millers could directly product alcohol and ethanol. The Centre had announced a national policy on bio-fuels in 2008 that mandated a phase-wise implementation ethanol blending with petrol in various States. However, it was implemented unbalanced without much of benefit.

It may be noted that the industry had sought to enhance the ethanol blending with a view to bailout the sinking sugar industry. The industry is willing to produce alcohol directly from sugarcane. Rao says that with limited correction and investment the capacity can be expanded for ethanol production.

As of now, there are supply constraints for the oil companies because of the inability to mix even five per cent ethanol. “Only about 2 per cent is being blended at present as there is a terrible shortfall in supply,” Rao points out.

Referring to Telangana State and Andhra Pradesh, Rao said that while distilleries were predominant in Andhra Pradesh, sugar mills were based in Telangana. Both States together require about eight crore litres of ethanol considering the present mandate of five percent blended petrol.

Following Tuesday’s announcement, there would be a requirement of 3.5 million tonnes of ethanol annually while the existing production capacity was less than two million tonnes. As such, there is a need to enhance the capacity of ethanol production.

Rao said, “To meet the mandated demand of ethanol, the sugar industry needs to produce directly and not as a by-product.” Recently, the Union Government had allowed mills to directly supply bio-fuel to bulk consumers like railways, shipping and State road transport corporations, among others.

Further, in order to increase the supply position, the government also proposes to promote production of ethanol from alternative sources like non-food feed stocks like bamboo, apart from molasses.

By KVVV Charya