Ukraine crisis: UP sugar industry looking to ramp up ethanol capacity

Lucknow

With the price of the Indian crude oil basket breaching the $100-per-barrel mark following the Ukraine crisis, the Uttar Pradesh (UP) sugar industry is looking to ramp up ethanol capacity for blending in fuel.

UP is India’s top ethanol producer with an installed annual capacity of 1.75 billion litres (BL). In the current year, the state is targeting to supply nearly 1.58 BL to the oil marketing companies (OMCs) for blending.

While the domestic blending ratio hovers around 10 per cent at present, the country is targeting to gradually augment it to 20 per cent by 2025.

Now, with the oil prices spiking because of the crisis and the disruption expected in crude supplies in near future, the ethanol distilleries, a majority of which are captive units of private-sector sugar mills in UP, are contemplating to augment production to meet the possible increase in demand for blending.

On condition of anonymity, a sugar industry official said the state ethanol producers had been advised to increase capacity in the anticipation of an increase in ethanol demand from the OMCs for blending.

He said UP possessed abundant raw material and installed capacity to meet any spurt in ethanol requirement for blending. “UP has a major stake in the domestic ethanol supply chain and any increase in supplies would directly benefit the sugarcane farmers too.”

In India, ethanol is primarily produced from sugarcane juice or molasses — a sugar by-product. The domestic ethanol prices vary, depending upon the ethanol raw material, from about Rs 46 to Rs 63 per litre. However, ethanol could also be produced from farm residue.

In fact, Prime Minister Narendra Modi has been quite hawkish in advocating a robust ethanol supply chain for pruning the oil import bill and also remunerative farmers, apart from ensuring prompt payment of cane dues by mills.

UP has a robust road map of increasing the UP ethanol capacity to 2 BL and subsequently to 2.25 BL.

Meanwhile, in the latest round of bidding for the requirement of 950 million litres (ML) by the OMCs for blending, the suppliers, mainly sugar mills, have offered to supply 390 ML.

For 2021-22 Ethanol Supply Year (ESY), the OMCs have so far allocated 3.85 BL of ethanol from different feedstocks.