Context:
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Union Food Ministry has notified decision to allow sugar mills to manufacture ethanol directly from sugarcane juice or an intermediate product called B-molasses.
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In this regard, Sugarcane Control Order, 1966 has been amended.
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The move would help mills divert cane juice for ethanol manufacturing during surplus years.
Why this decision is important?
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Sugar mills are incurring losses as prices of sugar have fallen below production cost on account of record output of 32 million tonnes (mt) in 2017-18 season as against annual domestic demand of 25 mt.
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The production of ethanol directly from sugarcane juice or B-molasses will help to divert this overproduction.
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Sugar mills are expecting revenue realisation of over Rs 5,000 crore from sale of ethanol to OMCs during the 2017-18 sugar season (October-September).
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OMCs procure ethanol from sugar mills for blending with petrol.
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Government has mandated blending of up to 10% ethanol in petrol but inadequate availability has restricted this to under 4%.
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Higher price for ethanol will incentivise higher ethanol production.
