Molasses export duty won't help meet 15% blending aim
Informist, Wednesday, Jan 17, 2024
By Afra Abubacker
MUMBAI – Though the imposition of export duty on molasses would improve production of ethanol, India is unlikely to meet the ethanol blending target of 15% for 2023-24 (Nov-Oct), according to industry experts.
"Although we (India) exported a small quantity (of molasses) before the government's order, the restrictions are likely to increase the availability of ethanol by about only 200 mln ltrs for domestic usage," Uppal Shah, co-founder and chief executive officer of Agrimandi.Live Research, told Informist.
DEEP-DIVE
On Monday, the Centre imposed an export duty of 50% on molasses, a by-product obtained from refining sugarcane juice into sugar, with effect from Thursday to increase the domestic availability of molasses.
"...it was necessary for the national interest to impose an export duty on molasses to achieve higher ethanol blending," Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories, said.
"Molasses exports were already slowing down as the industry was anticipating a restriction on exports," he said, adding that a 50% duty is as good as an export ban.
The National Federation of Cooperative Sugar Factories expects ethanol blending to increase to 12-15% in 2023-24. Latest petroleum and natural gas ministry data shows oil companies achieved 10.26% blending with petrol in November.
However, Shah said, "We expect around 10% ethanol blending to be achieved in the current ethanol supply year ending in October".
Sugarcane juice, B-heavy molasses, and C-heavy molasses are used as feedstock for production of ethanol. Sugarcane juice has the most sugar content, followed by B-heavy molasses and C-heavy molasses.
To reduce dependence on crude oil, India plans to achieve 15% blending of ethanol with petrol in 2023-24 (Nov-Oct), 18% in the subsequent year, and 20% in 2025-26. To achieve the 20% ethanol-blended petrol target by 2025, about 10.16 bln ltr of ethanol would be required.
However, drop in sugar production and firm prices of the sweetener have already affected ethanol production. India's sugar production in 2023-24 (Oct-Sep) is seen lower by 7.7% at 30.5 mln tn due to drop in sugarcane production, according to the federation.
In view of the limited availability of sugarcane in the country, the government, on Dec 15, directed sugar mills to restrict the diversion of sugarcane juice and B-heavy molasses for ethanol production.
But, concerned about falling behind on the ethanol blending programme, the government encouraged mills to use C-heavy molasses for ethanol production. Taking cues from the government directive, oil companies, on Dec 29, increased the procurement price of ethanol made from C-heavy molasses by 6.87 rupees per ltr to 56.28 rupees a ltr. Later on Jan 5, oil companies increased the price of ethanol from maize by 5.70 rupees to 71.86 rupees a ltr.
Annually, India exports 10% of the total molasses produced, or 1.5-1.6 mln tn, which would yield around 380 mln ltr of ethanol, according to the Indian Sugar & Bio-energy Manufacturers Association. India exports molasses to Thailand, the Netherlands, South Korea, and the UK. End
