“Ethanol can help the sugar industry emerge from production glut and economic challenges”
The Union government, through its policies favoring ethanol, hopes to solve the cyclical problem of overproduction in the sugar industry. Subsidizing interest, fixing the sale price of ethanol and allowing the production of ethanol directly from cane juice are some of the policy level interventions the government has put in place to push sugar mills to start producing ethanol and achieve the government’s 10-year target. % ethanol blend in fuel. By 2030, the government plans to increase the blend to 20% with 5% biodiesel.
Pramod Chaudhari, Executive Chairman of Praj Industries Limited, headquartered in Pune, which has been a pioneer in the ethanol sector, talks to The Indian Express about the developments in the sector and the way forward
As the government pushes for ethanol, how possible is it for the sugar industry to jump on the fuel bandwagon? Is the infrastructure ready for plants to produce ethanol? Sweets require the current purchase price to be kept stable for a long time, is this feasible?
Ethanol can certainly help the sugar industry emerge from the current cycle of overproduction and the economic challenges that come with it. Currently, the mills rely primarily on sugar sales to meet their expenses, which include payment to cane growers. However, over the past two seasons, a production glut has brought new challenges to the industry, with many factories failing to pay cane growers. Globally, sugar prices have been low, making exporting difficult.
The government’s intentions are clear and current ethanol prices for B and C molasses, or cane juice, are lucrative enough for factories to switch to ethanol. The expanded blending program allows for a fixed market for plants to sell ethanol. Over the past couple of years, the lifting of ethanol has certainly improved, which would encourage factories to invest and get into ethanol production. Policy roadblocks have also been largely resolved.
While the government has authorized an interest subsidy to factories that invest in ethanol production, financial institutions are reluctant to lend the capital needed to start up their production capacity. Thus, there is a catch-22 situation, which can be examined. In terms of pricing, current prices are good, however, as ethanol prices are tied to fuel prices, it may not be possible to fix them for a long time.
How long will it take for factories to start producing ethanol? How have mills in different sugar-producing states reacted to this?
Logically, it will take two years for the factories that have obtained the authorization and started the construction or improvement of their existing capacities to start production. Private millers reacted more positively to this opportunity than cooperative millers. Factories in Uttar Pradesh, Karnataka and Maharashtra have responded well to the ethanol policy and are preparing to go. Surprisingly, Gujarat mills showed a lukewarm reaction to it. Maharashtra factories have many potential markets to explore, such as Kerala, which has a very low level of blending. It can help them in the long run.
Tell us about Praj’s R&D in this sector…
In Praj, we have developed a technology that would allow sugar mills to produce ethanol even when they are not grinding cane. The technology allows the grinders to “store” concentrated cane juice for use when the grinders are not grinding. This stored juice can be used to produce ethanol. This technology can be used to start up ailing factories and the revenue from the ethanol generated can be used to repay old and new unit loans. Thus, the unit will eventually be able to emerge from its financial crisis. Of course, the necessary authorization, the opening of an escrow account, etc. should be made at government level. Active consultations are ongoing at government level in this regard. There are also other solutions that are perfected by the company.
Tell us about second-generation ethanol production and how it can solve the problem of stubble burning in the north of the country?
The second generation integrated biorefinery extracts ethanol from agricultural waste such as rice and wheat stubble, etc. The current policy speaks of a sustainability deficit in financing the establishment of factories. The oil companies should commission these factories, which would be installed in different corners of the country.
In Praj, we are involved in the process of setting up four such plants for various oil companies – Panipat (Indian Oil Corporation), Bargat (BPCL), Badaun (HPCL) and Mangalore (MRPF). These plants are in various stages of construction and will be ready for production within the next 18 to 24 months. Agricultural residues will be used in these plants for the production of ethanol.
These factories have immense potential to generate entrepreneurship and rural employment. Collecting agricultural residues can act as a catalyst to generate local start-ups that can deal directly with farmers. We do not go directly into frontline operations, but help build the capacity of these companies.
Praj has already commissioned the second generation integrated biorefinery demonstration plant at Shree Nath Mhaskba Sugar Mill in Pune, which operates using rice stalks. European Union officials also visited the plant.