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Informist, Friday, Mar. 21, 2025

 

--Sugar federation MD: To ask co-op mills to seek ethanol interest subsidy 

--CONTEXT: Federation of co-op sugar mills MD in interview with Informist

--Sugar federation:To expedite ethanol interest subsidy applications Apr-May

--Sugar federation: Hope all 63 co-op distillers to shift to multi-feedstock

 

By Afra Abubacker

 

NEW DELHI – The National Federation of Cooperative Sugar Factories will run a campaign in the next two months to expedite loan applications under the ethanol interest subvention scheme, said Prakash Naiknavare, the managing director of the federation. The scheme provides financial help to cooperative sugar mills to become multi-feedstock distilleries and produce ethanol from grains--maize, rice, and damaged foodgrains--besides sugar. 

 

"Distillers will be called to start the (loan) application process. The federation has planned camps for the next two months. And in that camp, the officers from the Petroleum Ministry, Food Ministry, Cooperation Ministry, and NCDC (National Cooperative Development Corporation) will be there," Naiknavare told Informist in an interview. The campaigns will be held in major sugar-producing states--Maharashtra, Uttar Pradesh, Karnataka, Tamil Nadu, and Gujarat. 

 

Of the 259 cooperative sugar mills, 63 have distillation capacity to make ethanol from molasses or sugarcane-based feedstocks. The federation expects to convince all these 63 units to apply for the subvention scheme, Naiknavare said. 

 

"Currently, they (cooperative mills) don't have multi-feed machines. The government has come up with a scheme only for the cooperatives. And that will help them install the additional machinery. We can use grain (as feedstock) after the molasses season is over and continue producing ethanol," he added. Molasses-based distillers have restricted time for making ethanol as sugarcane crushing is seasonal.

 

To ensure ethanol supply round the year, the government, on Mar. 6, announced an interest subvention scheme exclusively for cooperative sugar mills. Under the scheme, the government will provide an interest subvention of 6% per annum or 50% of the interest rate charged by financial institutions, whichever is lower, for five years, including a one-year moratorium against the loan availed by project proponents. 

 

"It is a very good scheme. The interest subvention will give a good result. If the funding is done by NCDC, then the current rate of interest is 8.5%. And 50% of that will be 4.25%," Naiknavare said. Further, for the benefit of cooperative sugar mills, the interest rate for term loans has been reduced to 8.5% from 9.75?rlier, he added.  

 

However, the scheme announced in March has a short window of only 6 months. Naiknavare expects the campaign to help mills expedite their application process for loans. 

 

Asked why the scheme was exclusive for cooperative mills, Naiknavare said: "In comparison to the private sector, we are lagging behind majorly because of poor balance sheet. So some ground can be covered. We are looking at it very positively." Earlier, both private and cooperative sugar mills could avail loans under the interest subvention scheme to enhance ethanol production capacity. The scheme for private mills closed in April 2023, Naiknavare said. 

 

By transitioning to multi-feedstock, Naiknavare expects cooperative distilleries' ethanol production capacity to increase from the current 1.04 billion litres per annum. Private sugar mills have about 8.50 billion litres of ethanol production capacity, an official from The Indian Sugar Mills & Bio-Energy Manufacturers Association, said. 

 

Also, cooperative distillers' financial liquidity will improve as plants will not remain idle after the cane crushing season ends, Naiknavare added. 

 

The government has been promoting cooperative mills through various schemes. In the 2024-25 ethanol supply year (Nov-Oct), oil marketing companies are prioritising cooperative sugar mills over private mills while allocating ethanol supply orders. 

 

Additionally, the National Cooperative Development Corp. has sanctioned loans worth INR 98.93 billion to 48 cooperative sugar mills so far under the grant-in-aid scheme, Minister of Cooperation Amit Shah said in a written reply to the Rajya Sabha. The cooperative development body will raise additional funds from the market to provide financial assistance of INR 100 billion to cooperative sugar mills. 

 

ETHANOL SUPPLY 2024-25 

To reduce dependence on crude oil, the government has set a target of achieving 18% blending in 2024-25 (Nov-Oct) and 20% in the next year. To achieve the 20% blending aim, India needs about 10.16 billion litres of ethanol. As of Feb. 28, India had achieved nearly 18% blending with petrol. 

 

In the ongoing ethanol supply year, most ethanol is set to come from grain-based feedstocks. Of the 9.97 billion litres allocated--34% will come from molasses, 49% maize, 11?maged grain, and 6% from Food Corp. of India's surplus rice, Naiknavare said. 

 

However, going forward, industry experts feel sugar mills are likely to default on their supply orders amid stagnant ethanol rates. Citing the rise in production costs, mills have been demanding a hike in ethanol prices. But the government only increased prices of ethanol made from C-heavy molasses to INR 57.97 per litre from INR 56.28 per litre in 2024-25. Ethanol made from sugarcane juice is priced at INR 65.61 per litre and B-heavy molasses at INR 60.73 per litre, unchanged from 2022-23.

 

Amid disappointing hikes in ethanol prices, sugar trade bodies have cut their estimate of sugar diversion for ethanol to 3.50 million tonnes in March, down from 3.75 million tonnes in January, and 4.00 million tonnes in November. Trade bodies have also cut their diversion estimate amid firm sugar prices. 

 

Sugar prices have firmed up on concern over lower sugar production. The federation has estimated the country's sugar production to fall 17.3% on year to 25.9 million tonnes in the sugar season ending Sept. 30. Last year, the country's sugar output was 31.90 million tonnes.  End

 

Edited by Akul Nishant Akhoury

 

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