Ban on sugarcane juice won't affect ethanol blending targets: Officials

The government's decision to not use sugarcane juice for making ethanol will not affect the Centre's target of achieving 20 per cent blending in petrol by Ethanol Supply Year (ESY) 2025-26, officials said.

On Thursday, the government directed all sugar mills not to use sugarcane juice or syrup for making ethanol this year. The 2023-24 sugar season started in October, while the ethanol supply year (ESY) began in November.

The production of ethanol from B-heavy and C-heavy molasses is allowed. Sugar mills will be encouraged to produce more from the latter while existing orders from B-heavy molasses would continue, Food Secretary Sanjeev Chopra said.

Chopra said sugar production had decreased over the past one and a half months, and was expected to be down in the 2023-24 season. But a monthly review system will be instituted to keep an eye on the situation, he said. While the decision has been taken for the ongoing ESY, a change in sugar supply in the domestic market may trigger a change in the policy, other officials said.

The latest government direction has come as negative news for sugar companies, with their stocks trading lower for the second day on Friday. Investors felt that ethanol realisations would get impacted as the major feedstock moved to produce more sugar.

The Centre's ethanol blending programme has been a major success for petrol, with E20 petrol (petrol blended with 20 per cent ethanol) now selling at more than 1,900 pumps by public-sector oil marketing companies. India managed to meet the initial target of 10 per cent ethanol blending in mid-2022, ahead of the targeted timelines of November 2022.

This achievement in the past eight years has translated into a forex impact of over Rs 41,500 crore, reduced greenhouse gas emissions of 2.7 million metric tonnes, and farmers being paid Rs 40,600 crore.