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‘Ethanol can help sugar industry get out of production glut, economic challenges’

Parthasarathi Biswas
"While the government has allowed an interest subvention to the mills that invest in ethanol production, the financial institutions are wary of lending the capital needed to start their production capacities"

The Union government, through its policies favouring ethanol, hopes to solve the cyclic problem of over production in the sugar industry. Interest subvention, fixing the sale price of ethanol and allowing production of ethanol directly from cane juice are some of the policy-level interventions that the government has put in place to push the sugar mills to go for ethanol production and meet the government s target of 10 per cent blending of ethanol in fuel. By 2030, the government plans to increase the blending to 20 per cent along with 5 per cent of biodiesel.

Pramod Chaudhari, executive chariman of Pune headquartered Praj Industries Limited, who has been a pioneer in the ethanol sector, speaks to The Indian Express about the developments in the sector and the way forward

With the government pushing for ethanol, how feasible is it for the sugar industry to jump on the fuel bandwagon? Is the infrastructure ready for mills to go for ethanol production? The sugar mills are asking for the present off-take price to be kept steady for a long period, is it feasible?

Ethanol can certainly help the sugar industry get out of the present cycle of glut in production and the economic challenges that come with it. At present, the mills rely mostly on sugar sales to meet their expenses, which include payment to the cane growers. However, for the last two seasons a glut in production has thrown fresh challenges before the industry, with many mills failing to pay the cane farmers. Globally, sugar prices have been low, which make exports difficult.

The government s intentions are clear and the present prices for ethanol from B and C molasses, or those from the cane juice, are lucrative enough for mills to pert to ethanol. The increased blending programme allows for a fixed market for the mills to sell ethanol. Over the last two years, the lifting of ethanol has certainly improved, which would be an incentive for mills to invest and go for ethanol production. The roadblocks in regards to policies have also been resolved to a large extent.

While the government has allowed an interest subvention to the mills that invest in ethanol production, the financial institutions are wary of lending the capital needed to start their production capacities. Thus, there is a catch-22 situation, which can be looked into. Price wise, the present price points are good, however, as ethanol prices are linked to the fuel prices, it might not be possible to fix them for a long time.

How long will it take for the mills to start ethanol production? How have mills in various sugar producing states reacted to this?

Logically, it will take two years for mills that have got the clearance and started construction or enhancement of their existing capacities to start production. Private millers have reacted more positively to the opportunity than the cooperative mills. Mills in Uttar Pradesh, Karnataka and Maharashtra have reacted well to the ethanol policy and are preparing to go for it. Surprisingly, the mills in Gujarat have shown lukewarm reaction to it. Maharashtra mills have a lot of potential markets to explore like Kerala, which has very low level of blending. This can help them in the long run.

Tell us about Praj s R&D in this sector…

At Praj, we have developed a technology that would allow sugar mills to produce ethanol even when they are not crushing cane. The technology allows mills to store concentrated cane juice to be used when the mills are not crushing. This stored juice can be used to produce ethanol. This technology can be used to start up sick mills and the revenue from the ethanol generated can be used to pay off the old and new loans of units. This way, the unit will be able to come out of its financial crisis eventually. Of course the necessary permission, opening of an escrow account, etc would have to be done at the government level. Active consultations are going on at the government level in this regard. There are other solutions, too, that are being perfected by the company.

Tell us something about second generation ethanol production and how it can solve the problem of stubble burning in northern parts of the country?

The second generation integrated biorefinery derives ethanol from agri waste like rice and wheat stubble etc. The present policy talks about a viability gap in funding for setting up of plants. The oil companies are expected to commission these plants, which would be set up at various corners of the country.

At Praj, we are involved in the process of setting up of four such plants for various oil companies Panipat (Indian Oil Corporation), Bargat (BPCL), Badaun (HPCL) and Mangalore (MRPF). These plants are at various stages of construction and will be ready for production in next 18 to 24 months. Agri residues will be used in these plants for production of ethanol.

These plants possess immense potential to generate rural entrepreneurships and jobs. Collection of the agri residue can act as the catalyst for generating grassroot-level start-ups that can deal directly with the farmers. We are not getting directly into the frontline operations, but helping in capacity building for such companies.

Praj has already commissioned the second-generation intergrated biorefinery demonstration plant at Shree Nath Mhaskba Sugar Mill in Pune, which runs using rice stalk. Officials from the European Union, too, have visited the plant.