Government allows 1.7 million tonnes sugar diversion for ethanol production

In a move to bolster ambitious biofuel initiative and mitigate potential disruptions, the government has given the nod to sugar mills to redirect up to 1.7 million metric tonnes of sugar for ethanol production, news agency Reuters reported citing government and industry sources on Friday.

Government had previously imposed restrictions, barring sugar mills from utilising cane juice for ethanol production. This directive was rooted in concerns over production challenges exacerbated by drought conditions in  Maharashtra and Karnataka.

However, the government decided to allow the diversion of cane juice and B-heavy molasses for ethanol production, setting a cap at 1.7 million metric tons for the ongoing 2023-24 marketing year that commenced on October 1, as confirmed by officials.

An unnamed senior government official revealed that a designated quota would soon be allocated for sugar mills and distilleries in accordance with official regulations. Despite the diversion of sucrose for ethanol production, the official affirmed that the available sugar supply remains sufficient to meet local demand.

This government initiative will provide a significant boost to the industry, which has invested substantial capital over the past five years to enhance ethanol production capacity, as highlighted by an anonymous senior industry official.

(With Reuters inputs)