Maharashtra Ethanol Policy: Financial Strain for Sugar Units

Jalna, Sep 14 (PTI) Former Maharashtra minister Rajesh Tope on Monday raised concerns over the financial viability of sugar-based ethanol distilleries in the state if the government restricts production from direct sugarcane juice and B-heavy molasses.

Sugar factories have invested thousands of crores of rupees in ethanol projects in response to the Centre's E20 blending policy, but any restriction on key feedstocks could leave these plants facing difficulties in securing raw material and servicing bank loans, he asserted.

"Maharashtra has around 179 operational distilleries, including 143 sugar or molasses-based units and 36 grain-based projects. The investment in sugar industry-based distilleries in Maharashtra is estimated at Rs 16,000-20,000 crore," Tope informed.

Sugar industry-based distilleries have a combined annual ethanol production capacity of around 3.8 billion litres, while grain-based distilleries can produce around 1.04 billion litres annually, the NCP (SP) leader said.

"Production may fall if the industry is forced to depend largely on C-heavy molasses. However, salaries, maintenance expenses, insurance, environmental compliance costs and bank instalments will continue," Tope claimed.

Lower production and unchanged fixed costs could increase the per-litre cost of ethanol and put pressure on the cash flows of sugar factories, particularly cooperative units already carrying substantial debt, he explained.


Tope suggested converting existing sugar-based distilleries to dual-feed systems capable of using both sugar-based feedstock and grain, adding that Maharashtra should also promote grain-based ethanol while ensuring sustainable availability of raw materials.

Maharashtra needs to balance three objectives in the 2026-27 season -- maintaining sugar supply and prices, ensuring adequate ethanol for E20 blending and protecting the financial viability of investments already made in distilleries, he said.

Tope also called for greater value addition from by-products such as DDGS (Distillers Dried Grains with Solubles), maize oil and carbon dioxide, besides producing biogas or compressed biogas from wastewater.

B-heavy and C-heavy molasses are intermediate and final by-products, respectively, generated during different boiling and sugar-extraction stages of sugarcane processing.

According to the Union government, the Ethanol Blended Petrol Programme (EBPP) is one of India's key energy initiatives aimed at improving energy security, supporting farmers and reducing environmental impact through greater use of domestically produced renewable fuel.

Blending of domestically produced ethanol procured at stable, pre-agreed prices insulated from global crude price hikes have ensured that consumers pay less per litre of petrol, as per the government.