By Dominick Rodrigues 

Mumbai : The sugar industry has welcomed the government’s recent announcement of an incentive to encourage sugar mills to divert excess sugarcane/sugar to ethanol and to achieve targets of blending ethanol with petrol in line with the ‘Ethanol Blended with Petrol program’, according to Vishwaraj Sugar Industries Limited (VSIL), Executive Director Mukesh Kumar. 

Quoting the Union Food Ministry as having stated that “incentive on sugar sacrificed for producing ethanol from B-heavy molasses/sugarcane juice/sugar syrup/sugar has been doubled from October 2021 onwards in their monthly release quota,”   Kumar said the Government is expected to announce a price hike of around Rs 2-3 per litre for ethanol in its new contract starting from December 1. 

“Now, those sugar mills — which will be diverting sugar to ethanol — would be getting 100% incentive for the entire quantity of sugar sacrificed on producing ethanol from B-heavy molasses/sugarcane juice/sugar syrup/sugar in their monthly release quota,” he quoted while noting that Vishwaraj Sugar Industries Limited (VSIL) is expanding its distillery capacity by 150 KLPD to produce 250 KLPD ethanol, at an estimated cost of Rs 150 crore at its existing plant in Belgaum district in Karnataka. 

The Centre is taking several steps for diversion of sugar to ethanol and, in order to find a permanent solution to address the problem of excess sugar, the government is encouraging mills to divert excess sugarcane to ethanol, he said, adding that a target of 10 per cent blending of fuel grade ethanol with petrol has been fixed for 2022 and 20 per cent blending by 2025. 

Kumar said that Vishwaraj Sugar Industries Limited has also drawn up Rs 250 crore expansion plans for setting up of +greenfield+ sugar factory along with a distillery facility in Karnataka, for which land acquisition and preliminary process has commenced. 

India is a leading sugar-producing country and during the new sugar season which started from October, the sugar production is estimated at 310 lakh tonnes — which will be the same as last year — but the production of ethanol will increase substantially due to more distilleries, Kumar said. 

While VSIL is an integrated sugar company producing sugar, power and ethanol, the de-regularization of sugar witnessed the company developing a robust marketing and sales team and the company’s turnover is expected to double in the next 5 years after the proposed projects go on stream, he said.  

The company has reduced its dependence on sugar and, in the year ending March 2021, the sugar sales accounted for 66% of the total revenue. However, the ethanol revenue is expected to go from 30-35 % to 50 percentage terms going forward following the government’s initiative, Kumar said. 

Both sugar and ethanol prices are expected to remain firm and the prices have firmed up due to market forces in the local market, where prices will remain higher in the international market due to failure of crops in Brazil, he said.