Farm minister: Govt to decide on monetary sugar sops in 8-10 days; Govt to OK direct ethanol manufacture from cane

The government will announce monetary support for beleaguered domestic sugar mills in the next 8-10 days to help them clear cane arrears to farmers, Agriculture Minister Sharad Pawar said today. "We are planning to provide monetary support to sugar mills on the condition that it is passed on to the farmers," Pawar said on the sidelines of a conference. He said the group of ministers on sugar has forwarded to the Union Cabinet
its recommendations on the incentives to be given to the industry, which is likely to take its final decision in 8-10 days.

Mills in the major sugarcane growing state of Uttar Pradesh have pending cane arrears of over 19 bln rupees. They have been seeking soft loans from the government to help them clear these dues.

ETHANOL BOOST
Pawar said the government also plans to allow mills to produce ethanol directly from sugarcane to tide over the glut in the sugar industry. Ethanol is currently produced from molasses, a by-product of sugar. Diverting cane towards direct production of the green fuel will ensure lower sugar output in the next season.

The industry is currently battling a glut, which is likely to worsen in the next crushing season that begins Oct 1, as output is pegged over 33 mln tn. The country's sugar output in the current season is estimated 48% higher year-on-year at about 28.5 mln tn. Pawar said the ministerial panel has recommended increasing ethanol
blending in petrol to 10% by Oct 2008 to ensure higher consumption.

The government currently allows 5% ethanol blend in petrol. Mills are allowed to sell ethanol to oil companies at 21.50 rupees a L. Pawar said the government will hold discussions with the oil ministry as well as oil companies to push forward the proposal.

N Murukumbi of Shree Renuka Sugars says that the move will reduce sugar surplus, and it is a positive for the industry. The government move will benefit integrated players most and the bigger market for ethanol will also improve sugar market.

Rana Sugar, KCP Sugar, Kothari Sugar, Ponni Sugar, Mawana Sugar, Uttam Sugar, Sakthi Sugar, KM Sugar, Dharani Sugar, Dhampur Sugar, Upper Ganges Sugar, Simbhaoli Sugar, Oudh Sugar, Thiru Arooran and Bannari Sugar have all hit the upper circuit of 20% on the above news. Shree Renuka Sugar, Balrampur Chini and Triveni Engineering are up more than 23%.