8/12/2019 1-Indian Ethanol Production

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Indian Ethanol Production

Overview: The current ethanol development in India can be termed as a turn-around period with the outlook being positive forethanol manufacturers. Some prospects and challenges of using ethanol include energy security, trade balance and risk reduction;environmental benefits such as reducing carbon dioxide, hydrocarbons and volatile organic compounds; economic benefits includingin-country capacity utilisation, scope for industry expansion and additional market outlet. Indias small ethanol industry meets its oil,potable and chemical industry demands.

It is believed that raising the blending limit to 10% will strengthen prospects and Indian sugar mills could soon switch to the Brazilianstyle of using cane juice directly for ethanol. To replace 10% petrol, India would need 900 million litres ethanol or an extra 300million litres next year.

It is believed that the 10% blend ratio will soon be implemented. A 40% implementation rate (implying a 4% overall blend ratio) in2009-10 are estimated, resulting in 280 million litres of alcohol deficit, to be bridged by direct conversion of cane juice into ethanol.Direct ethanol production will require an additional 3.5 million tonnes of cane, about 1.2% of estimated production. Most of thecontractual obligations for ethanol supply to oil marketing companies will expire in 2010 following which it is likely that contracts willbe renewed at a higher price.

Ethanol blending programme (EBP) fell considerably behind target this year owing to restricted availability of molasses Even so, Mandatory E10 blends declared in October 2008 Annual ethanol requirement: 1.6 bln litres

E10 blending likely to be introduced soon

2008-09 (E) 2009-10 (E)

Supply

Sugarcane production (million tonnes) 285 295

Molasses as percentage of cane crush 4.5 4.5

Molasses production (million tonnes) 12.8 13.3

Molasses for alcohol production (percent) 75 75

Molasses consumption rate (litres/tonnes) 220 220

Potential alcohol production (million litres) 2116 2190

Demand

Gasoline demand (million tonnes) 11.5 12.4

Conversion factor (litres/tonne) 1312 1312

Gasoline demand ( million litres) 15113 15113

Ethanol blending rate (percent) 10 10Implementation rate (percent) 40 50

Automotive use (million litres) 605 817

Potable and industrial use (million litres) 1575 1654

Deficit ( million litres) 63 280

Direct conversion from cane (litres/ tonnes) 80 80

Additional cane required (tonnes) 0.8 3.5

As a percentage of total production 0.3 1.2

Source: Morgan Stanley, September 2008