The 2023-24 Ethanol Supply Year (ESY) has commenced from November 1, 2023. The Government fixes the price at which ethanol is procured by the Oil Marketing Companies (OMCs) from sugar mills in each ESY for blending with petrol. However, in this new ESY, there is a delay in the announcement of the ethanol prices, which is causing a lot of uncertainty for the sugar mills. A price indication helps sugar mills plan their product mix better- as to how much sugar and ethanol will be produced in the given season in terms of revenue generation.
In ESY 2022-23, the Government announced ethanol prices on November 2, 2022. However, in 2023-24 ESY, it’s almost mid-November, but the prices are yet to be announced.
The Ethanol Blending Programme (EBP) has been aggressively pushed by the Government for its multiple benefits. The target of E20 was advanced by the Government from 2030 to 2025, given improved ethanol production capacities. In 2021-22 ESY, the ethanol blending target was 10%, which was successfully achieved by the country. In ESY 2022-23, the EBP target was 12%.
For the new ESY, the ethanol blending target is 15%. On 21st October, the OMCs invited bids for the supply of around 825 crore litres of Denatured Anhydrous Ethanol, which is the highest bid so far in any ESY.
But the question remains how will this prolonged delay in the announcement of the ethanol prices, affect ethanol production in the season?
Vijay S. Banka, Managing Director, Dwarikesh Sugar Inds Ltd., said that the prolonged delay in announcing ethanol prices for the upcoming ESY 2023-24 is posing significant challenges to the ethanol production sector. “Timely and transparent price notifications are crucial for the smooth functioning of the ethanol industry. This delay disrupts the planning and investment decisions of ethanol producers who rely on price certainty to make informed choices about production levels and resource allocation. To ensure the continued growth and stability of the ethanol industry, it is imperative that regulatory authorities expedite the announcement of ethanol prices” he said.
As per AgriMandi.live Research estimate, the total sugar production in the current season is estimated at 29.8 MMT (after factoring in sugar diversion for ethanol production of around 4.0-4.2 MMT). The Indian Sugar Mills Association (ISMA) which recently announced its 1st advance estimates of sugar production in 2023-24 SS said that diversion of sugar towards ethanol will be estimated after the announcement of feed-stock wise ethanol procurement price for ESY 2023-24.
Ravi Gupta, Executive Director, Shree Renuka Sugars Ltd said that the sugar production season has already started, and mills cannot decide sugar/ethanol mix without knowing the ethanol prices. “The Government should declare ethanol prices at the earliest and keeping in mind the sugar revenue sacrificed based on current sugar prices. It is important to maximise ethanol production to achieve the target of 20 per cent ethanol blending program by 2025,” he said.
As per the prices announced by the Government in ESY 2022-23, which continues to be applicable, the price of C heavy molasses is Rs. 49.41 per litre. The price of ethanol from B heavy molasses is Rs. 60.73 per litre and the price of ethanol from sugarcane juice/sugar/sugar syrup is Rs. 65.61 per litre. Additionally, GST and transportation charges are also payable.
The sugar industry is hopeful that the ethanol prices will be announced soon with a decent price revision in consonance with the sugar prices which are firm at this point.
