With ethanol storage capacities brimming and liquidity nearing zero, sugar mills in Uttar Pradesh, particularly these with distilleries, have been pressured to search for new methods to sort out the scenario following the lockdown imposed attributable to COVID-19 outbreak.
In an SOS name to grease advertising and marketing firms (OMCs), which have been unable to take ethanol provides from the distilleries due to a steep drop in petrol consumption put up the lockdown and their very own storage tanks being full, representatives of distilleries have requested for reallocation of depots in different faraway states too.
“Some reallocations had already happened to neighbouring states on mutual agreement between the distillers and OMCs. But since the demand or tankage capacity in several of these reallocated depots in MP, Jharkhand and West Bengal has already exhausted, we have requested the OMCs check out depots in some other states like Gujarat, Rajasthan, Chhattisgarh, Assam, Odisha, Kerala, AP and Telangana,” mentioned a distiller, including that the OMCs additionally agreed to verify the method of permissions in states like Assam and Odisha, which make zero ethanol mixing as of now, and make sure how a lot ethanol they’ll soak up these depots.
Sugar mills in UP are nonetheless crushing sugarcane, producing molasses and growing ethanol manufacturing repeatedly, and can proceed to take action for the following month or extra. In order to maintain their operations in full swing with out interruptions, it’s vital that the offtake of ethanol is easy in order that their molasses and ethanol storage tanks don’t begin overflowing.
Talking to FE on situation of anonymity, an official of one of many OMCs mentioned that with the autumn in crude worth, ethanol has turn into costlier and if it needs to be transported to faraway states, it provides to the fee. “It is best if we can consume the ethanol closer to the distilleries. But since that is not possible now, we are looking at options in states where blending has not been happening till now. But this would definitely incur additional freight charges,” he mentioned. While the OMCs bear a set value of the freight, distillers bear the remaining value.
Asked to touch upon this, UPSMA secretary common Deepak Guptara mentioned that although it’ll put an extra transport value on the distillers, the reallocation will infuse the distillers with some liquidity and in addition assist cut back their storage burden. “Also, exploring these uncharted areas are a new opportunity, as blending has not been done in most of these states, especially the northeastern states,” he mentioned.
While all different states have been going through sugar and ethanol deficiencies attributable to a poor cane crop, UP has the utmost provides of each. As on April 15, UP had produced over 400 lakh quintal molasses.