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Fuel Tax Cut Fuels Ethanol Boom, But Feedstock Fears Rise
11 Jun
Summary
- Shree Renuka Sugars increased ethanol production to 1250 KL/day.
- Government removes excise duty on high ethanol blended petrol.
- El Nino concerns may impact sugarcane production, posing a feedstock challenge.
Shree Renuka Sugars has recently expanded its ethanol production capabilities, increasing capacity from 720 Kiloliters per day to 1250 Kiloliters per day. This strategic ramp-up aligns with the government's push for increased ethanol blending in petrol.
The central government has exempted petrol blended with higher ethanol concentrations from excise duty. This significant policy change, which includes a nil rate for various duties and cesses on petrol with 22% to 30% ethanol, supports India's energy transition goals. The industry has ample capacity, around 20 billion liters, to meet the demand for E20 and E30 fuels, which require 10 and 15 billion liters respectively.
Despite sufficient production capacity, a potential challenge lies ahead. Concerns over the impact of El Nino on monsoon conditions and subsequent sugarcane production could lead to a feedstock scarcity. Industry leaders anticipate that the primary hurdle going forward will be securing adequate raw materials rather than meeting demand for ethanol-blended fuels.
