Buy the by-products

Unlike their name, sugar mills do not manufacture sugar only; molasses, ethanol and electricity are also the valuable by-products of this industry. But, the country has been unable to reap benefits from these sources which can contribute to the distillery, energy and petroleum sector. 

The sugar industry has repeatedly asked the government to support them with buying ethanol and electricity, as well as creating a policy instrument so as to force the distilleries in Nepal to buy molasses. However, the results are not encouraging since the demands of the industrialists has largely been unheard by the government. The indifference had been worst in terms of buying energy from the sugar mills.

The Nepal Electricity Authority (NEA) is still preparing the draft of the Power Purchase Agreement (PPA) for buying electricity generated by the sugar industries although the Department of Electricity Development (DoED) had signed agreements in last September with Reliance Sugar Mills to purchase 15 MW electricity and Indu Shankar and Everest Sugar Mills to buy 3 MW energy from each of them. It’s been almost a decade since the mills have asked the government to create policy environment for the same.

The 13 sugar mills across the country can produce 70 – 80 megawatt electricity from the bagasse. The sugar industries generate electricity by burning the bagasse, sugarcane fibre left over after extracting juice. About seven mills have shown interest in generating electricity. 

Purchasing electricity from the sugar mills will give respite to the NEA as the energy will be available in dry season when the run-of-the-river based hydroelectricity projects go as down as producing 45 to 50 per cent of their capacity.

Similarly, the sugar industry has claimed to provide about 22,000 hectoletre ethanol. The government some years ago had announced to mix ethanol with diesel and petrol but the decision has not been implemented yet. Use of ethanol can reduce the pollution from the gasoline and save foreign currency used in the purchasing the fossil fuel. Ethanol is comparatively clean fuel and comes at the price of Rs. 44 per litre against the current petrol price of Rs. 111. India has started to mix 10 per cent ethanol in petrol and diesel.

Likewise, selling molasses to the distilleries will save hard earned foreign currency. It will also contribute to food security by saving the food grains used in brewing liquor.

Creating an environment to support the sugar mills to sell sugar by-products will have instant positive impacts on the industry, sugarcane farmers, distilleries, national energy-mix and environment. Due to the government set price of raw materials and end product, the industrialists are facing challenges to run the industries smoothly. 

Every year, during the sugar crushing season from October to April, the tension between the farmers and mills goes up as the mills fail to pay the cane price to the former just because their expensive product does not find the market due to the cheaper smuggled sugar from India and elsewhere. The sugar industry is the bread and butter of more than 100,000 farmers who produce 2 million tons of sugarcane per annum.

The sugar entrepreneurs long have been urging the government to establish a high-powered Sugar/Sugarcane Development Board. To settle the issues like price and import of sugar, utilising the by-products, and research and development, the board will be an effective solution.

Published in The Rising Nepal daily on 24 August 2018.