Govt Pushes for Ethanol, Sugar Mills Say It’s Unviable

Chiranjeevi Kulkarni (Deccan Herald News Service) The Centre’s push for ethanol, touted as an effective tool to cut oil imports, may not get a positive response from sugar mills with owners expressing concerns about 28% GST on molasses and low subsidy for transportation of the spirit. Hindustan Petroleum Corporation Limited (HPCL) has invited a public tender on August 10 to procure 329 crore litres of ethanol between December 2018 to November 2019.

Krishna Kishore, general manager of HPCL’s South Central Zone, said they aim to procure 27.85 crore litres, president of South India Sugar Mills’ Association, Karnataka Chapter, Anand Reddy said they will be able to meet the most, if not the entire requirement, of oil companies in Karnataka.

The farmers, however, say ethanol has the potential to ensure cash flow into factories in crisis. “Though it is our sugarcane that will be used to produce ethanol, farmers don’t get anything. However, we hope that the factories will benefit enough to clear the Rs 1,500 crore they owe to farmers,” said Sugarcane Growers’ Association president Kurubur Shanthakumar. READ MORE

Excerpt from Outlook India: At present, most banks are not keen to provide loan to sugar mills due to risks associated with the sugar sector because of its cyclic nature. However, it need to be seen how many mills will be able to avail the soft loan at a subsidised interest rate under the scheme to augment the ethanol production.

Under the scheme, the government is encouraging building additional ethanol production capacity as it would help diversion of cane during surplus season.

Ethanol extracted from sugarcane will be used for blending in petrol and will provide cane farmers remunerative price for their crop. Ethanol doping in petrol will also help the country cut its oil imports

The country’s sugar production is estimated to have touched a record 32 million tonnes in the 2017-18 season (October-September), as against 20.3 million tonnes in the previous year. The demand is around 25 million tonnes. READ MORE