Union Food Ministry has notified decision to allow sugar mills to manufacture ethanol directly from sugarcane juice or an intermediate product called B-molasses. In this regard, Sugarcane Control Order, 1966 has been amended. The move would help mills divert cane juice for ethanol manufacturing during surplus years.
Now in case of production of ethanol directly from sugarcane juice or B-molasses, the recovery rate of sugarcane factory will be determined by considering every 600 liters so produced as equivalent to one tonne of production of sugar. Earlier, sugar mills were allowed to manufacture ethanol from by-product called C-molasses, after sugar was taken out while processing raw sugarcane juice. Molasses is also used for manufacturing spirit and alcohol among other products.
Sugar mills are incurring losses as prices of sugar have fallen below production cost on account of record output of 32 million tonnes (mt) in 2017-18 season as against annual domestic demand of 25 mt. The production of ethanol directly from sugarcane juice or B-molasses will help to divert this overproduction. Sugar mills are expecting revenue realisation of over Rs 5,000 crore from sale of ethanol to OMCs during the 2017-18 sugar season (October-September). OMCs procure ethanol from sugar mills for blending with petrol. It has mandated blending of up to 10% ethanol in petrol but inadequate availability has restricted this to under 4%. Higher price for ethanol will incentivise higher ethanol production.