04/09/2019 - Government Policies

KEY POINTS

·        Recently, the government approved an increase in the price of ethanol to be procured by public sector oil marketing companies (OMCs) from sugar mills for blending with petrol for the year 2019-20.

·        The Cabinet Committee on Economic Affairs (CCEA) also allowed conversion of old sugar into ethanol, which again is expected to help mills deal with the current overproduction in the sweetener and make timely payments to farmers for the cane delivered by them.

·        Given the surplus sugar production in the country, it has allowed mills to produce ethanol from ‘B’ heavy molasses and directly from sugarcane juice.

·        CCEA approved even use of sugar and sugar syrup for production of ethanol; mills can simply add these to the molasses mother liquor for further fermentation.

·        But the real impetus has come from mills getting higher rates for ethanol manufactured from the ‘B’ heavy and sugarcane juice routes.

·        There is a huge incentive to produce ethanol today. This has been additionally facilitated by the government mandating 10% blending of petrol with ethanol.

·        If mills are able to divert more of cane juice for ethanol, it would mean producing less sugar. Since the country is producing too much sugar and is importing oil, the ethanol-blending programme is beneficial both for mills and for the country’s balance of payments.

·        Ten-per-cent blending requires 330 crore-odd litres of ethanol, which can now be produced through the ‘B’-heavy molasses and sugarcane juice routes as well.

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