Sugar-ethanol price parity must in India for achieving 10% blending: Brazilian expert

PTI New Delhi | Updated on February 24, 2020  Published on February 24, 2020

ethanol 1India’s target of 10 per cent ethanol blending with petrol is achievable provided there is a price parity between sugar and ethanol, global ethanol expert Plinio Nastari said on Monday.

He said a long-term price policy is required in India to define the ethanol versus sugar parity which will give visibility to the investors for making investment to boost production capacity.

Last year, India – the world’s second largest sugar producing nation – achieved 5 per cent blending of ethanol in petrol, much lower than the target of 10 per cent. Lack of ethanol production capacity is the main hurdle in achieving the target. Brazil, the world’s leading sugar producer, is a pioneer in ethanol blending with petrol and achieved more than 25 per cent.

“The long-term policies including the ethanol-sugar price parity policy has been instrumental in the capacity building of ethanol in Brazil. Similar long-term stable policies in India are a must, Nastari, who is a member in Brazil’s National Council on Energy Policy, said while speaking on India’s policy on ethanol at an event here.

On Indian banks being conservative in giving loans to mills for setting up ethanol capacity owing to poor balance sheet, Nastari said a similar situation had prevailed in Brazil way back in 1980s but the then Brazilian president directed that loans for ethanol should be given on priority. There was a direct Brazilian government support then.

He also said proper regulations should be in place for ethanol blending and distribution. The Indian government has approved 362 projects to augment ethanol production capacity of 400 crore litres under a scheme, but banks have sanctioned loans in less than 100 projects so far, as per the government data.

Asserting that there should be a long-term price parity on ethanol and sugar, industry body ISMA President Vivek Pittie said 10 per cent blending of ethanol with petrol can be achieved with sugarcane juice and not with other raw materials like B-heavy molasses and C-molasses. The price parity should be there when sugar prices fluctuate. It should not be the case that ethanol prices are fixed lower when sugar prices go up, he added.

At present, there is some sort of price parity as the government has fixed price of ethanol made from sugar and juice at Rs 59.48 per litre, from B-heavy molasses at Rs 54.27 per litre and from c-molasses at Rs 43.75 per litre for the 2019-20 season (December-November).

Whereas sugar prices in the country are ruling at Rs 32-33 per kg at ex-mill.

Also, as per the interview report of Business Standard with the Raizen CEO and President, Mr. Luis Henrique Gulmaraes , one of the Brazil’s biggest ethanol producers is looking for partnerships with Indian firm to achieve the 10% ethanol blending target through exporting second generation ethanol to India. Such ethanol is produced only by bagasse and sugarcane leaves.

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