Mr SV Balasubramaniam
India produces 1.3 billion liters of alcohol from molasses with a capacity utilization of around 50%. In 2001-2002, India produced 8 million tons of molasses with a potential to produce 1.6 billion liters of alcohol. This would leave a surplus of about 500 million liters of alcohol to meet the 5% ethanol blend requirement of the country. Among the agro-based commodities which are used as feedstock for the production of ethanol, sugarcane is the most cost effective, next to molasses. The energy input-output ratio is more favorable to sugarcane as compared to other feedstocks like corn and other starchy materials for ethanol production. Besides, ethanol production from cane juice gives an additional flexibility to the sugar industry to even out the uneven rate of sugar production and thereby impart stability to sugar production and pricing.
State Government Clearances
Capacity addition has been rather slow mainly due to the abnormal delay in clearances by State Governments for putting up ethanol plants, which is a simple process of removing water from rectified spirit for which no special clearances are required. A senior-level delegation of the Ministry of Petroleum & Natural Gas had visited various States and impressed upon them the need to create capacity for ethanol production. Though the State Governments have agreed in principle to clear such projects most expeditiously, distillery units have been facing problems in obtaining clearances resulting in delays in putting up the required capacity. This is a matter which needs immediate attention.
Pricing of Ethanol The industry has suggested a negotiated price which should be valid for a period of 3-4 years to encourage capacity building. However, the Government has not agreed to this suggestion and the procurement is currently made through tenders and the tenderer at the lowest price is accepted. This often leads to a very unremunerative pricing of ethanol. This is another factor that needs to be resolved to create the right atmosphere for capacity building which is an area of high priority considering the program of the Government to increase the blend proportions to 10% and even higher.
Recently, the industry has agreed to supply ethanol at a price of Rs 17.50 per liter ex-factory. This price should have been made uniformly applicable to the entire country and also for a period of at least one year with an escalation in the subsequent year.
Interstate Movement of Ethanol
Presently, there are several restrictions on interstate movement of ethanol and rectified spirit. To ensure easy availability of blend fuels, interstate movement should be made free for ethanol at least.
Concessional Excise Duty Surcharge
The Government announced a concessional excise duty surcharge of Rs 5.70/liter on 5% ethanol-blended petrol as against Rs 6/liter on petrol effective from 1 January 2003 valid up to 28 February 2003. This concession has been extended for a period of one more year in the budget 2003-2004. This concession of 0.30 paise per liter needs to be increased to 0.75 per liter as initially announced by the Government and continued for a period of at least 4-5 years.
Production from Sugarcane Juice
Though molasses is the most cost-effective route for ethanol production, it may be desirable in the later period to augment its production using sugarcane juice to meet the requirement of higher blend proportions of 10% and above. There are certain ambiguities that need to be resolved - the fixation of statutory minimum price for sugarcane used for ethanol production, and nil rate of excise duty on sugarcane juice used for ethanol production, etc. A comprehensive policy on ethanol production based on sugarcane juice will help in augmenting production in a substantial manner.
There are no major barriers in the production of ethanol from cane juice. Distilleries consuming the molasses will be supplying ethanol. If there is an additional need for ethanol, converting cane juice into ethanol is not a problem, even technically. The government’s response is also encouraging and they are committed to the use of ethanol as a petrol and diesel blend.
|
Sugar
Factory |
Total
Capacity (million ltrs) |
Total
Requirement (million ltrs) |
|
Uttar
Pradesh, Punjab, Haryana, Chandigarh |
|
|
|
Total
requirement |
|
100 |
|
Current
demand based on the actual coverage |
|
(70) |
|
Availability
from existing 6 units |
81 |
|
|
One
unit will be operational by March 2003 and |
12 |
|
|
2
more units are awaiting L.O.I. |
12 |
|
|
Total |
105 |
100 |
|
Maharashtra
& Goa |
|
75 |
|
Availability
from 4 existing units |
51 |
|
|
18
units received L.O.I. likely to be put up by June |
144 |
|
|
Total |
195 |
75 |
|
Gujarat,
Diu & Daman, Dadra Nagar Haveli |
|
|
|
Total
requirement |
|
45 |
|
Availability
from existing 2 units in the State (The balance is met out of surplus from
Maharashtra) |
18 |
|
|
Karnataka |
|
|
|
Total
requirement |
|
34 |
|
Availability
from two existing units |
21 |
|
|
Availability
from 3 units expected to be commissioned in the 2nd quarter of 2003 |
24 |
|
|
Total
availability |
45 |
34 |
|
Andhra
Pradesh |
|
|
|
Total
requirement |
|
37 |
|
Existing
capacity of 1 unit |
|
|
|
Availability
from 7 units which are awaiting LOIs and likely to be operational by September
2003 |
37.5 |
|
|
Total
availability |
45 |
37 |
|
Tamil
Nadu & Pondicherry |
|
|
|
Total
requirement |
|
46.2 |
|
6
units are expected to be commissioned in the second quarter of 2003 |
58 |
|
|
Total |
58 |
46.2 |
|
Grand Total |
466 |
337.20 |
Participants: Mr SV Balasubramaniam
Chairman & Managing Director, Bannari Amman Sugars and President, Indian Sugar Mills Association (ISMA)
252 Mettupalayam Road, Coimbatore - 641 043
Tel: 0422 - 2435969; Fax: 0422 - 2431199
Besides holding the position of Chairman of Bannari Amman Sugars in Coimbatore, Mr SV Balasubramaniam is also Chairman of over ten other companies. He is an Associate Member of the Institutes of Chartered Accountants and of Company Secretaries of India. He is also currently the President of the Indian Sugar Mills Association, New Delhi