The government today announced a slew of measures aimed at helping the sugar industry.
These include subsidised loans to sugar mills to help them clear dues of farmers and making mandatory the blending of 5 per cent ethanol in petrol with immediate effect across the country, barring the North East, Jammu and Kashmir and the island territories.
It also allowed sugar factories to produce ethanol directly from sugarcane juice to augment its availability and reduce oversupply of sugar.
At the same time, 10 per cent blending has been made optional from this year, but this would become mandatory from next October.
A uniform nation-wide purchase price of Rs 21.50 per litre (ex-factory) for supply of ethanol for the next three years was also decided at a meeting of the Cabinet Committee on Economic Affairs here today.
The Indian sugar industry is facing its worst crisis, with mills not even able to recover the cost of raw material. This year's production, at 28 million tonnes, is 45 per cent higher than last year's 19.2 million tonnes.
Consequently, sugar prices have dropped sharply and most companies have incurred losses in the last two quarters. Mills have not been able to pay the cane prices to farmers.
In other decisions, the Cabinet also approved conversion of outstanding loans on account of harvesting and transport charges and short margins on sugar stocks, as appearing in the books of the sugar mills on April 1, 2007, into term loans up to a maximum period of five years, without any reduction in the existing rate of interest, and to provide higher interest subvention from budgetary support to the tune of Rs 600 crore.
The CCEA today gave its approval for providing loans to sugar mills from the banks under special guidelines. They would be entitled to loans of an amount equivalent to central excise duty paid by them, Finance Minister P Chidambaram told reporters after the meeting.
The government also gave its approval to extend the moratorium on outstanding term loans as on April 1, 2005, announced in September 2005 for co-operative sugar mills, from two to up to five years (reckoned from April 1, 2005) and to include co-operative sugar mills, not included in the earlier package, for availing the benefits of the earlier package.
The CCEA also extended export subsidy by one more year from April 19, 2008 to April 18, 2009, to target an additional export of 3 million tonnes of sugar.
It also decided to reduce Customs duty on denatured alcohol from 7.5 per cent to 5 per cent and on molasses from 10 per cent to 5 per cent.
The measures will be implemented once the mandatory 5 per cent ethanol blending comes into effect. It also approved extending the export assistance scheme under Sugar Development Fund to April 2009.
Prices are expected to fall further with yet another record production, projected at over 30 million tonnes, in 2007-08. Annual domestic demand hovers around 20 million tonnes.
The Union government has already announced incentives such as creation of a 5 million tonnes buffer stock and export subsidy (at a rate of Rs 1,350 a tonne for coastal sugar mills and Rs 1,450 a tonne for the non-coastal mills) to help the beleaguered industry.
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Tuesday, October 9, 2007
Cabinet clears sugar industry sops
Friday, September 28, 2007
Ethanol - India Story
WHAT IS FUEL ETHANOL
Ethanol (ethyl alcohol, grain alcohol, ETOH) is a clear, colorless liquid with a characteristic, agreeable odor. In dilute aqueous solution, it has a somewhat sweet flavor, but in more concentrated solutions it has a burning taste. Ethanol, CH3CH2OH, is an alcohol, a group of chemical compounds whose molecules contain a hydroxyl group, -OH, bonded to a carbon atom. The word alcohol derives from Arabic al-kuhul, which denotes a fine powder of antimony produced by distilling antimony and used as an eye makeup. Alcohol originally referred to any fine powder, but medieval alchemists later applied the term to the refined products of distillation, and this led to the current usage.
ETHANOL AS A FUEL
Ethanol is used as an automotive fuel by itself and can be mixed with gasoline to form what has been called "gasohol" FUEL ETHANOL- the most common blends contain 10% ethanol and 85% ethanol mixed with gasoline. Over 1 billion gallons of ethanol are blended with gasoline every year in the United States. Because the ethanol molecule contains oxygen, it allows the engine to more completely combust the fuel, resulting in fewer emissions. Since ethanol is produced from plants that harness the power of the sun, ethanol is also considered a renewable fuel. Therefore, ethanol has many advantages as an automotive fuel.
Most industrial ethanol is denatured to prevent its use as a beverage. Denatured ethanol contains small amounts, 1 or 2 percent each, of several different unpleasant or poisonous substances. The removal of all these substances would involve a series of treatments more expensive than the federal excise tax on alcoholic beverages (currently about $20 per gallon). These denaturants render ethanol unfit for some industrial uses. In such industries undenatured ethanol is used under close federal supervision.
Ethanol has been made since ancient times by the fermentation of sugars. All beverage ethanol and more than half of industrial ethanol is still made by this process. Simple sugars are the raw material. Zymase, an enzyme from yeast, changes the simple sugars into ethanol and carbon dioxide. The fermentation reaction, represented by the simple equation C6H12O6 2 CH3CH2OH + 2 CO2 is actually very complex, and impure cultures of yeast produce varying amounts of other substances, including glycerine and various organic acids. In the production of beverages, such as whiskey and brandy, the impurities supply the flavor. Starches from potatoes, corn, wheat, and other plants can also be used in the production of ethanol by fermentation. However, the starches must first be broken down into simple sugars. An enzyme released by germinating barley, diastase, converts starches into sugars. Thus, the germination of barley, called malting, is the first step in brewing beer from starchy plants, such as corn and wheat.
ETHANOL IN INDIA
India imports nearly 70% of its annual crude petroleum requirement, which is appox. 110 million tons. The prices are in the range of US$ 50-70 per barrel, and the expenditure on crude purchase is in the range of Rs.1600 billion per year, impacting in a big way, the country's foreign exchange reserves.( Oil Prices touched a record high of $76 per barrel )
The petroleum industry now looks very committed to the use of ethanol as fuel, as it is expected to benefit sugarcane farmers as well as the oil industry in the long run. Ethanol (FUEL ETHANOL) can also be produced from wheat, corn, beet, sweet sorghum etc. Ethanol is one of the best tools to fight vehicular pollution, contains 35% oxygen that helps complete combustion of fuel and thus reduces harmful tailpipe emissions. It also reduces particulate emissions that pose a health hazard.
10% blending from October 2008: The Government is serious of considering 5% doping mandatory with immediate effect & are willing to increase it to 10% from October 2008. This decision will be directly benefiting the sugar cane producing states like Uttar Pradesh, Maharashtra, Karnataka, Tamil Nadu, Andhra Pradesh, Gujrat & Bihar. As all these states are facing a serious problem of excess sugarcane cultivation for the current year and also could face the same in future too.
Hard Road Ahead: The policy is now clear but still the question of comfort zone of Oil Marketing Company is important. The ethanol producers should concentrate on the technologies by bringing the cost of production at lower end & here Brazil’s input is important.
The Indian Sugar Mills and the private stand-alone ethanol manufacturers should cut the cost of production by using good technologies requiring less utilities like steam, water and electricity and they should also concentrate on co-generation through effluent generated by Sugarcane Juice & Molasses Route. The lower cost of production can still bring the ethanol prices down from the current Rs. 21.50 per liter. Suppliers from Maharashtra are supplying at Rs. 19.50 per liter. The ethanol suppliers should now focus on producing large quantum as this could drop the production cost creating a Win-Win Situation.
ETHANOL WORLDWIDE
Other countries are either producing and using ethanol in large quantities or are providing incentives to expand ethanol production and use. Brazil and Sweden are using large quantities of ethanol as a fuel. Some Canadian provinces promote ethanol use as a fuel by offering subsidies of up to 45 cents per gallon of ethanol.
India is initiating the use of ethanol as an automotive fuel. A move has been made by distilleries in India to use surplus alcohol as a blending agent or an oxygenate in gasoline. Based on experiments by the Indian Institute of Petroleum, a 10 percent ethanol blend with gasoline and a 15 percent ethanol blend with diesel are being considered for use in vehicles in at least one state.
In France, ethanol is produced from grapes that are of insufficient quality for wine production. Prompted by the increase in oil prices in the 1970s, Brazil introduced a program to produce ethanol for use in automobiles in order to reduce oil imports. Brazilian ethanol is made mainly from sugar cane. Pure ethanol (100% ethanol) is used in approximately 40 percent of the cars in Brazil. The remaining vehicles use blends of 24 percent ethanol with 76 percent gasoline. Brazil consumes nearly 4 billion gallons of ethanol annually. In addition to consumption, Brazil also exports ethanol to other countries.
Sweden has used ethanol in chemical production for many years. As a result, Sweden’s crude oil consumption has been cut in half since 1980. During the same time period, the use of gasoline and diesel for transportation has also increased. Emissions have been reduced by placing catalytic converters in vehicle exhaust systems which decrease carbon monoxide, hydrocarbon, and nitrogen oxide emissions. To address global warming concerns, the amount of carbon dioxide produced while burning fossil fuels must be reduced. Ethanol-blended gasoline and ethanol-blended diesel are being considered as viable alternatives to further lower emission levels.
Benefit to Common People
Comparative Current prices as in Brazil (per gallon) -
1. Pure alcohol (95% purity) ethanol = 1.35 R$ = 29.70 RS.
2. Gasoline with 25% ethanol mandatory by law = 2.46 R$ = 54.12 RS.
3. Gasoline with 25% of ethanol + additives (octane boosters)= 2.56 R$ = 56.32 RS.
