Sugar companies have started announcing capital expenditure after a long gap to enhance their ethanol production capacity. Their decision has largely been enthused by the Centre’s plans to advance its target of 20 per cent ethanol blending with petrol to 2023 from 2025.
The latest to join the bandwagon is Wilmar Group company’s Shree Renuka Sugars, which has announced plans to nearly double its ethanol capacity to 1,400 kilo litres per day (klpd) from 720 klpd in phases with an investment of ₹450 crore.
In February, the company decided to raise ethanol capacity to 970 klpd due to growing demand. Considering the huge untapped demand for ethanol due to the government policies on ethanol blending, the Board of Directors of Shree Renuka Sugars approved further capacity expansion from 970 klpd to 1,400 klpd. The entire project is expected to be completed by October 2022.
Similarly, Dalmia Bharat Sugar will raise its ethanol manufacturing capacity to 15 crore litres per annum by next January from eight crore litres currently. The expansion will happen at the company’s plant at Jawaharpur, Nigohi and Kolhapur plants. One new distillery will be set up at Ramgarh.
BB Mehta, Whole Time Director, Dalmia Bharat Sugar and Industries, said the advancement of ethanol blending programme means that in the next 4-5 years, the company will be able to balance the sugar output with demand, which will translate into reasonable prices for sugar.
“Currently, the company is diverting about 60,000 tonnes of sugar for ethanol production while after expansion it will increase to over 1.10 lakh tonnes,” he said.
Saddled by huge sugar inventory, other companies are also planning to enhance their ethanol production capacity. With the Centre offering export assistance of ₹6,000 a tonne, sugar mills have contracted to export 5.85 million tonnes of sugar so far compared with a target of six million tonnes.
However, the government cannot provide such assistance for sugar exports from 2023 due to WTO norms. The Central government expects investment to the tune of ₹41,000 crore to achieve the incremental ethanol production capacity.
Currently, India has ethanol producing capacity of 425 crore litres and a capacity of 50 crore litres will be added by next sugar season (November 2021-October 2022).
With a supply of 325 crore litres, India can achieve 8.5 per cent blending. To achieve 20 per cent blending, the country needs 850 crore litre of ethanol and a higher installed capacity of 1,000 crore litres as sugar companies use part of ethanol for producing alcohol by fermenting it with grains, fruits or vegetables.