UP Sugar Mills Association (UPSMA) petitioned the Yogi Government to decontrol molasses and allow its export to other States as mills were facing problem in storage due to glut of sugar during the 2017-18 season.
Molasses is a byproduct of sugar industry and primarily used for making country liquor, cattle feed and chemical industry. Ethanol produced from molasses is used for blending with petrol. The UPSMA urged the state government to promote production and usage of ethanol to keep molasses stock under check. In June, the government had raised mandatory reservation limit of molasses for country liquor industry from 50 to 60 per cent.
Association representatives pointed out that without decontrol, the country’s top sugarcane and sugar producing state was unlikely to optimally capitalise on ethanol price hike by the Centre unless the government decontrolled the sale of molasses.
Recently, the Centre had announced hike in ex-mill price of ethanol derived out of ‘C’ heavy (final) molasses by almost Rs 3 to Rs 43.70 per litre for the next contract period starting December, 2018.
Besides, for the first time, the Centre had decided to encourage production of ethanol, for blending with petrol, directly from sugarcane juice and ‘B’ heavy molasses by fixing a higher price of almost Rs 4per litre above the price of ethanol made from ‘C’ heavy molasses.
As per estimates, with 5 per cent mandatory blending requiring 1.6 billion litres of ethanol, ethanol manufacturers could fetch an additional revenue of around Rs 4,800 crore in the next crushing season.
However, despite market glut and record sugar production translating in record molasses production, the sugar industry was deprived of the benefits of bumper production.
“Unless the state governments relinquished their control of molasses for production of ethanol, manufacturers will continue to be conservative when participating in tenders floated by public sector oil marketing companies,’’said a Sugar Mill Association member.
In 2017-18, the total production of molasses stood at 5.32 million tonnes (MT) but only 2.97 MT was lifted, leaving unsold stock of 2.55 MT with mills.
The UPSMA lamented that while there was ‘sufficient’ demand for molasses in other states and international market, these options could not be fully availed in time due to restrictions imposed on export outside UP.
Meanwhile, the state government is looking at the new dynamics and a senior Cane department official said, “We would review the emerging situation and take a call accordingly in the interest all stakeholders in the state.”