Sugar diversion for ethanol may have to be over 45 lt to achieve 18-20% blending in 2024-25

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As the sugar (in terms of sucrose) diversion for ethanol ended at 24 lakh tonnes (lt) in the season ended September, the delay in announcing a hike in ethanol prices for supply year 2024-25 may adversely impact availability, potentially reducing the ethanol blending with petrol (EBP) at below 18 per cent.

Though the government hopes 40-45 lt of sugar may be diverted for ethanol in the current season by sugar mills, the actual requirement may be even more if the intent is to achieve 18 per cent blending, sources said. “The industry will take a decision on the route of ethanol production, whether will it be from direct sugarcane juice or syrup or from B-Heavy molasses (BHM), based on the purchase prices declared by the government. If the government delays in announcing the hike, many sugar mills may have to take the BHM route, which will increase sugar production and reduce ethanol,” said a former president of a sugar industry body.

Uncertainties

India’s sugar production in 2024-25 season (October-September) may be around 320 lt, including the quantity to be diverted for ethanol, sources said. In case 45 lt are diverted, the actual sugar output will be 275 lt, against an estimated demand of 290-295 lt.

However, as the opening stock of sugar was about 79 lt on October 1, the availability will be comfortable with about 354 lt, which is comfortable to meet domestic demand and carry forward enough sugar for next season.

Amid some uncertainties with regard to sugar for ethanol, companies have started looking towards alternatives like increasing liquor production if they have their own facilities or manufacturing more alcohol, industry sources said.

The Centre’s target of achieving 15 per cent EBP in the ethanol supply year (ESY) 2023-24 (November-October) has entailed analysts and industry sources calling the move ambitious considering that the cumulative rate till September 2024 stood at 13.8 per cent.

Even as the Centre has maintained the blending rate roughly at 15.5 per cent and above on a monthly basis since May 2024 in the current ESY, analysts and industry experts anticipate that there may be about 14 per cent blending.

In ESY 2023-24, the total ethanol supply on a provisional basis was 647.66 crore litres, which included 231.58 crore litres from sugar mills. The supply from mills comprises 81.81 crore litres from BHM, 27.58 crore litres from C-heavy molasses (CHM) and 55.98 crore litres from sugar syrup, industry data show.