Govt removes sugar diversion cap for ethanol production, allows distilleries to participate in rice auctions

The diversion of sugar to ethanol production vis-a-vis its production in the country will be constantly monitored so that year-round sugar availability for domestic consumption is maintained

The Union government, via a notification dated August 29, removed the cap on sugar diversion for ethanol production for ESY (Ethanol Supply Year) 2024-25, in a move likely aimed towards boosting ethanol output.

The Ethanol Supply Year runs from December to November.

"Sugar mills and distilleries are allowed to produce ethanol from sugarcane juice/sugar syrup, B-Heavy molasses as well as C-Heavy molasses during ESY 2024-25 as per the agreement with OMCs," according to the notification from the Ministry of Consumer Affairs, Food and Public Distribution.

DFPD (Department of Food and Public Distribution), in coordination with the MoPNG (Ministry of Petroleum and Natural Gas), shall periodically review the diversion of sugar to ethanol production vis-a-vis the production of sugar in the country, so that year-round sugar availability for domestic consumption is maintained, the notification added.

In a separate notification also dated August 29, the DFPD said ethanol distilleries may also be allowed to participate in the auction of FCI (Food Corporation of India) to private traders while ensuring:

1. The distilleries may be allowed to participate in e-auction and lift the rice during Aug-Oct 2024 as per the final auction rate of rice every week.
2. The rice may be allowed for lifting subject to allocation of ethanol to the concerned distilleries by OMCs using FCI rice as feedstock.
3. Maximum 23 LMT rice may be allowed for lifting to ethanol distilleries.

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