Restrictions on ethanol procurement from sugar and key cane-derived feedstocks have been placed on government-owned oil firms for the coming supply cycle, a measure that may help safeguard domestic sugar availability at a time when below-average rainfall puts local harvests under pressure. The measure is set to come into force starting 1 November, when the ethanol supply year turns over.
Reduced sugarcane harvests — tied to a below-average monsoon season and dry conditions linked to El Niño — have tightened available supplies and placed upward pressure on sugar prices worldwide, forming the backdrop against which the decision was taken. As one of the top two sugar-producing nations globally, India has seen a reduced harvest push questions about adequate supply of the commodity to the forefront.
Five state-owned fuel companies have collectively put out a joint procurement tender covering close to 11 billion litres of ethanol for the upcoming supply year, acting on directions from the government, news reports indicate. Four feedstock categories — sugarcane juice, sugar, sugar syrup, and B-heavy molasses — fall outside the scope of ethanol that qualifies under the tender.
Diverting less cane fibre away from sugar processing may ease the strain on supplies that have been running tight. Oil companies retain the ability to draw on other approved feedstocks for ethanol, meaning the curbs fall short of cutting off supply altogether.
The five state-owned refiners that jointly put the procurement document out for bids are Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum Corporation, Numaligarh Refinery, and Mangalore Refinery and Petrochemicals.
Under the National Policy on Biofuels, feedstocks ranging from C-heavy molasses and food grains rendered unfit for consumption to surplus rice held by the Food Corporation of India, corn, and other approved raw materials are available to producers seeking to supply ethanol. Permitting purchases from corn, damaged grain stocks, and other sanctioned feedstocks broadens the range of pathways through which oil companies can satisfy their blending obligations.
Ethanol output has been built up across the country over recent years, with the twin aims of trimming reliance on foreign crude and opening an extra revenue stream for those who grow sugarcane. Revenue for sugar mills has diversified through ethanol contracts with oil companies, reducing their dependence on sugar as the sole source of income.
A five-year acceleration of the original timeline brought India's petrol-ethanol blending rate to the 20 per cent mark by 2025. Restrictions introduced in the latest regulatory cycle may place new boundaries on how much sugarcane-derived feedstock ethanol producers are permitted to draw on across the coming supply year.
