ISMA demands Centre to increase price of ethanol to Rs 69.85 per litre

The government has fixed the price of ethanol extracted from sugarcane juice or syrup at Rs 65.60 per litre for the supply year beginning December 2022

New Delhi: Indian Sugar Mills’ Association (ISMA) on Tuesday demanded that the government increase the price of ethanol extracted from sugarcane juice or syrup to Rs 69.85 per litre, saying that without proper returns there cannot be additional investments to boost supply.

The government has fixed the price of ethanol extracted from sugarcane juice or syrup at Rs 65.60 per litre for the supply year beginning December 2022. ISMA, in a representation to the food ministry, said the price of ethanol extracted from sugarcane juice or syrup should be Rs 69.85 per litre considering the Fair and Remunerative Price (FRP) of Rs 305 per quintal.

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Now that sugarcane FRP has further been increased to Rs 315 per quintal for the 2023-24 sugar season (October-September), an enhancement of the price of ethanol is required, it said in a statement.

The increase in ethanol price is necessary because the industry without proper returns cannot make additional investments in boosting the supply to achieve the government’s target of 20 per cent blending by 2025, it added.

According to ISMA, about 1,200 crore litres of ethanol would be required to achieve 20 per cent blending in petrol by 2025. Of this, about 400 crore litres of ethanol was contracted in 2022-23. “For the additional 800 crore litres, ISMA estimates a massive capacity enhancement that will require an investment of Rs 17,500 crore with a reasonable return on investment,” it said.

Without proper return, ISMA said the industry and the banks will not be able to make these additional investments. The supply of sugarcane juice has been below the government’s expectations in the current year due to viability of the current price.

Among other demands, ISMA has also sought certain amendments in the tender terms issued by oil marketing companies and continuation of interest subvention scheme.