Cabinet ups ethanol procurement price for 2018-19

The Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister, has given its approval to revise/fix the price of ethanol derived from B heavy molasses/partial sugarcane juice and fix a higher price for 100% sugarcane juice based ethanol for the forthcoming sugar season 2018-19 from December 1, 2018 to November 30, 2019 as under.

The ex-mill price of ethanol derived out of B heavy molasses/partial sugarcane juice has been revised to Rs. 52.43 per litre, from the prevailing price of Rs. 47.13 per litre, while the price of ethanol derived from 100% sugarcane juice has been revised upward to Rs. 59.13 per litre, from Rs.47.13 per litre, for those mills who will divert 100% sugarcane juice for production of ethanol, thereby not producing any sugar.

Additionally, GST and transportation charges will also be payable. Oil marketing companies (OMCs) have been advised to fix realistic transportation charges so that long distance transportation of ethanol is not disincentivised, the CCEA said in a press release.

OMCs have also been advised to prioritise ethanol from 100% sugarcane juice, B heavy molasses/partial sugarcane juice, C heavy molasses and damaged food grains/other sources, in that order.

Impact

According to the government, the decision will serve multiple purposes of reducing excess sugar in the country, increasing liquidity with the sugar mills for settling cane farmer’s dues and making higher quantity of ethanol available for the Ethanol Blended Petrol (EBP) programme.

The EBP programme was launched by the Government in 2003 on pilot basis, which has been subsequently extended to the Notified 21 States and 4 Union Territories. The Government has notified an administered price of ethanol since 2014, which has served to significantly improve the supply of ethanol during the past four years. The ethanol procured by OMCs has increased from 38 crore litres in ethanol supply year 2013-14 to estimated 140 crore litres in 2017-18.

It is worth noting that as compared to ethanol derived from C heavy molasses, diversion of B heavy molasses reduces the sugar by about 20% and increases ethanol availability by about 100%. On the other hand, diversion of sugarcane juice reduces sugar by 100% and increases ethanol availability by about 600%.