Former Maharashtra minister Rajesh Tope has voiced concerns regarding the potential impact of government restrictions on sugar-based ethanol production in the state. He indicated that limitations on sourcing raw materials from direct sugarcane juice and B-heavy molasses could jeopardise the financial viability of numerous ethanol distilleries in Maharashtra. This assertion was made during a statement on Monday, highlighting the burgeoning challenges faced by sugar factories which have already invested significantly in ethanol projects.

Investment in Ethanol Projects

Tope noted that sugar factories have committed a substantial amount, estimated between Rs 16,000 crore and Rs 20,000 crore, in response to the Centre’s E20 blending policy. With about 179 distilleries currently operational in Maharashtra, comprising 143 sugar or molasses-based units and 36 grain-based facilities, the investments reflect a proactive stance towards enhancing ethanol production capacity. The cumulative annual ethanol production capability of these factories stands at approximately 3.8 billion litres for sugar-based distilleries, while grain-based projects can yield around 1.04 billion litres annually.

The former minister cautioned that any enforced reliance on C-heavy molasses could result in reduced production levels. He emphasised that fixed operational costs such as salaries, maintenance expenses, insurance, environmental compliance, and bank repayments would persist regardless of production output. The discrepancy between lower production and unchanged costs could subsequently elevate production expenses per litre, exerting additional pressure on the financial stability of sugar factories, particularly cooperative units already encumbered by debt.

In light of these challenges, Tope proposed converting existing ethanol facilities into dual-feed systems that would facilitate the use of both sugar-based and grain feedstocks. He advocated for Maharashtra to promote grain-based ethanol production concurrently while ensuring a sustainable supply chain for raw materials. This dual approach may help mitigate risks associated with the proposed restrictions.

Objectives for the 2026-27 Season

Tope highlighted the need for Maharashtra to achieve a balanced strategy across three pivotal objectives for the 2026-27 agricultural season. These include maintaining a steady sugar supply and price level, guaranteeing sufficient ethanol production for E20 blending, and safeguarding the financial health of current investments in distilleries. This multi-faceted strategy is crucial for ensuring the continued growth and sustainability of the sugar industry in the region.

Furthermore, Tope encouraged maximising value-added opportunities from by-products such as Distillers Dried Grains with Solubles (DDGS), maize oil, and carbon dioxide, alongside the production of biogas or compressed biogas from wastewater. These additional revenue streams could provide vital financial relief to ethanol producers.

B-heavy and C-heavy molasses, which are vital intermediate and final by-products from the sugar extraction process, play an important role in ethanol production. Their management and use can significantly affect ethanol output, making it essential for the industry to strategise effectively in response to any government directives.

Government Initiatives and Ethanol Blending Programme

The Union government’s Ethanol Blended Petrol Programme (EBPP) is aimed at enhancing energy security, supporting the agricultural sector, and minimising environmental impact through the adoption of domestically produced renewable fuels. The government has emphasised that stable, pre-arranged pricing for locally sourced ethanol helps shield consumers from fluctuations in global crude oil markets, thereby contributing to lower petrol prices.

As discussions continue regarding the future of ethanol production in Maharashtra, the focus remains on balancing economic viability with sustainable practices. The decisions made will likely have far-reaching implications for the region’s sugar industry and its stakeholders in the coming years.

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