UPSMA hails cabinet decision to hike ethanol price

UPSMA hails cabinet decision to hike ethanol price

Lucknow,Uttar Pradesh sugar industry has welcomed the National Democratic Alliance government's move to hike the price of ethanol for blending with petrol. The Cabinet Committee on Economic Affairs approved to fix the ex-mill price of ethanol derived out of 'B-heavy molasses' to Rs 52.43 per litre from the prevailing Rs 47.13 per litre. Till the 2017-18 sugar season, ethanol was allowed to be produced only from 'C-heavy molasses' and its price was fixed at Rs 40.85 per litre. The NDA government has now allowed the use of 'B-heavy molasses' for production of ethanol. Cane juice is rich in sucrose content and is used to produce sugar first.

The B-heavy molasses, too, have some sweetener in them and only C-heavy molasses do not have sugar content. UP being the largest sugar and ethanol producer, sugar mills are likely to shift to the new business model of producing ethanol from cane juice instead of sugar. The move is aimed at incentivising mills to cut surplus production that could prop up prices and proportionately trim oil imports that have weighed on the country's trade balance and rupee. UP Sugar Mills Association sources said here on Saturday that, "This is one of the best steps taken by the government to achieve the dual objective of encouraging more production of ethanol as well as of reducing surplus sugar. The revised price of ethanol will compensate for loss of revenue from the sugar sacrificed." "The hike in ethanol price will be an incentive for sugar mills to divert surplus B-heavy molasses for ethanol production," the UPSMA sources said.

"The price announced by the government is commercially neutral for millers to produce either sugar or ethanol. And with sugar stocks in the country burgeoning, it will be wiser to divert to ethanol, where cash flow will be faster," he said. However, some millers are worried because of the state government's decision to impose 12 per cent reservation on B-heavy molasses. Already, 150 applications have been submitted to the government by sugar mills to avail the Central government policy which extends subsidised loans to sugar mills to build additional capacities for ethanol over the next 2-3 years. "This will help the country in achieving 10-15 per cent ethanol blending with petrol, probably before the target of 2022," said the UPSMA.

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