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Serving Sri Lanka

This web log is a news and views blog. The primary aim is to provide an avenue for the expression and collection of ideas on sustainable, fair, and just, grassroot level development. Some of the topics that the blog will specifically address are: poverty reduction, rural development, educational issues, social empowerment, post-Tsunami relief and reconstruction, livelihood development, environmental conservation and bio-diversity. 

Thursday, July 27, 2006

Sugar, ethanol and economy

The Island: 27/07/2006" by Dr. C.S. Weeraratna, Chairman, Sugarcane Research Institute

Sugar is one of the main food items consumed in Sri Lanka. The per capita consumption of sugar in Sri Lanka is around 30 kg which is high when compared to average sugar consumption in the world. About two decades ago, sugarcane was cultivated in about 25, 000 hectares. There were 3,800 ha in Kantale, 5,600 ha in Hingurana, 4,500 ha in Pelawatta, 4,600 ha in Sevanagala and 5,700 ha in Moneragala. The total production of sugar in Sri Lanka at that time was around 114,000 t annually representing around 20 % of the local requirement. Kantale and Hingurana sugarcane plantations were closed due to various reasons, and at present only Pelwatta and Sevanagala sugar factories function. The total extent under sugarcane at present is around 15, 000 hectares. About 4,000 hectares are in Sevanagala, 9,000 hectares in Pelwatta., and 2,000 ha in other districts mainly Amapara, and Badulla Distrcits, cultivated by smallholders for production of jaggery, sugar syrup etc.

The total annual requirement of sugar in the country is around 500,000 t but only about 60,000 t are produced locally. The balance has to be imported. During the last few months sugar prices in the world market have increased substantially from around 300 US$/t to 450 US$/t . This is mainly because the world sugar supply has decreased attributable to the greater emphasis on using sugarcane to manufacture alcohol than sugar. With increase in demand for alcohol as a fuel additive, it is likely that the price of sugar will continue to increase from the present price which is around Rs. 60 /kg in the local retail market. The foreign exchange involved in importing our sugar needs is around Rs 12 billion. A number of by-products from sugarcane are also imported involving around Rs. 5 billion annually. Hence, developing the local sugar sector, will save foreign exchange up to around Rs 17 billion or even more. It will also increase employment opportunities in the country leading to socio-economic development. Large extents of land, suitable for sugarcane cultivation are found in Badulla, Moneragala, Galle, Kurunegala and Hambanthota Districts. Sugarcane Research Institute has initiated activities to promote sugarcane cultivation under coconut in Kurunegala District

Ethanol

One of the important by-product of the sugarcane industry is ethyl alcohol (ethanol) which is made from molasses. This is the portion of the sugarcane juice which contains sugars other than sucrose (what is normally consumed) and a number of other organic compounds. One of the compounds formed during fermentation of molasses is ethanol which is becoming extremely important as a fuel additive, in view of high prices of fossil fuel.

Many countries are either producing and using ethanol in large quantities or are providing incentives to expand ethanol production and use. Prompted by the increase in oil prices in the 1970s, Brazil introduced a program to produce ethanol for use in automobiles to reduce oil imports. Brazilian ethanol is made mainly from sugar cane. Pure ethanol (100% ethanol) is used in approximately 40 percent of the cars in Brazil. The remaining vehicles use gasohol blends of 24 percent ethanol with 76 percent gasoline. Brazil consumes nearly 4 billion gallons of ethanol annually. In addition to consumption, Brazil also exports ethanol to other countries. Some Canadian provinces promote ethanol use as a fuel by offering subsidies. India is initiating the use of ethanol as an automotive fuel. In France, ethanol is produced from grapes that are of insufficient quality for wine production. Sweden has used ethanol as a fuel substitute and as a result, Sweden’s crude oil consumption has been cut by almost half since 1980. Ethanol-blended gasoline is being considered as a viable alternative to further lower emission levels. The US now uses more than 15 billion gallons of cleaner, ethanol-blended petrol a year, totalling 12% of fuel sales in the US. Most of it is a 10% blend, but 85% and even 95% blends are now being tested. Ethanol blends are also increasingly used in South Africa and a number of other countries. Use of ethanol tends to reduce environment pollution caused by oxygenates such as tetraethyl lead, MTBE and ETBE used in petrol.

Use of Ethanol in Sri Lanka:

A high expenditure on petroleum will have many undesirable effects on the country’s economy. Hence, it is extremely important that we start producing and using alternatives to petroleum. As indicated earlier, ethanol is one of the alternatives used in many countries as a fuel. In Sri Lanka, ethanol is made mainly by fermenting molasses which is a by-product of sugar industry. At present, around 10 million litres of ethanol are produced annually in the country as a by product of sugar industry. This amount would increase considerably, to as much as 30 million litres if Hingurana and Kantale sugarcane factories operate at full capacity. Ethanol can also be made by fermenting and then distilling starch/sugar obtained from crops such as maize, sorghum, potatoes, cornstalks, fruit and vegetable waste. These crops are cultivated in Sri Lanka.

The ethanol obtained by fermenting molasses contains 3-4% water. If it is converted to anhydrous alcohol, it could be used to blend petrol,, as done in many other countries, thus reducing the use of imported fuel resulting in saving of foreign exchange. Studies conducted at NERD centre, Sugarcane Research Institute and at Open University show that petrol engines can run on 95% ethanol presently produced in the country. However, the long term effect of using hydrous alcohol is not known.

The financial viability of using alcohol as an alternative would depend on the taxes, duties etc. on petrol and alcohol, which influence the market prices. The landed cost of petrol and cost of production of alcohol are almost the same. However, the socio-economic benefits of using locally produced alcohol as opposed to use of imported petrol need to be realised when their competitive advantages are considered. .

A sub-committee of the Plantation Cluster of the National Council of Economic Development (NCED) has initiated studies, in collaboration with the Dept. of Mechanical Engineering of Moratuwa University and Ceylon Petroleum Corporation to examine the different aspects of using hydrous alcohol in three wheelers. The Minister of Science and Technology also has appointed a committee to examine the use of alcohol and other fuel additives in vehicles. If these endeavours produce positive results, it would be possible to use locally produced alcohol, at least in three wheelers and motor bicycles, resulting in a considerable saving of foreign exchange. At present there are about 250,000 three wheelers and 650,000 motor cycles. Hence, the total amount of petrol used by three-wheelers and motor cycles would be substantial.

Fuel and Economy: We spend a large sum of money in importing petroleum to Sri Lanka. With the rapid increase in fuel prices since mid last year it is likely that the 2006 annual fuel bill will be around Rs 200 billion. This constitutes almost about 25% of the value of our imports and is about 30% of our total exports which is Rs. 600 billion.A high expenditure on petroleum will widen our annual trade deficit, which is around Rs. 200 billion.. We are now importing crude oil on credit from India and Malaysia. We need to be concerned of the very high level of indebtedness, which stands at around Rs. 1200 billion, and the total debt service payments, which is around Rs. 350 billion per year, more than the total government revenue.

Increasing costs on petroleum will have many undesirable effects on the country’s economy. In fact, increasing diesel prices has resulted in a rise in almost everything including transport costs, bus and train fares, factory costs etc. leading to high rate of inflation. Diesel prices are also closely linked to cost of electricity as about 65% of electricity generated comes from thermal power stations, which run on diesel. On the top of it, according to newspaper reports, thermal power plants are under construction which will increase further the consumption of diesel causing an increase in costs and also pollution of the environment. Already, the sulphur dioxide level. in the atmosphere is high resulting in respiratory diseases.

Increasing diesel prices will have a corresponding effect on the cost of production of all our exports including tea, rubber, coconut and garments etc, resulting in a reduction in our competitiveness of our exports in the world market. This may even cause some industries to close down making employment of some people redundant. Most of the farmers, who constitute nearly 60% of the population, do not get any regular income. If their buying power is reduced, due to high prices of food and other consumer items, the demand for industrial products including those from the SME sector will decrease causing further retardation of the ailing economy of the country.

Alternatives

In view of the high costs involved in importing crude oil, it is extremely important that we start producing and using alternatives to petroleum. .Ethanol is an alternative which can be used as an alternative. It is already produced in Sri lanka, though not in sufficient amounts. However, if there is a concerted effort by the government and other related organisations availability of ethanol could be increased within a relatively short period.

Cultivation of sugarcane will not only increase local sugar production but also ethanol. availability. In fact, cultivation of 100 ha of sugarcane would increase local sugar production by around 800 t , ethanol availability by 100,000 litres , in addition to an increase in the production of other by-products and employment opportunities. One of the by-products is bagasse which could be used to generate electricity. Thus, promoting sugarcane cultivation in the country will result in many socio-economic benefits.

In addition to alcohol, bio gas is an alternative available within the country. Urban wastes can be used to produce bio-gas which can replace LP gas used for cooking. Dendro-power using fast growing nitrogen fixing tress such as glyricidia and leuceana, and solar-power are also potential alternatives. Various vegetable oils can be used to make bio-diesel. Thus, there are many alternatives to petroleum. All these alternatives need to be included in medium-long term plans in the energy sector.

Reducing fuel consumption

While developing petroleum alternatives, it is essential that action be also taken to reduce fuel/power consumption in the country. Otherwise, as indicated elsewhere, the trade deficit will continue to rise. In many other countries such as China, Thailand, Philippines etc. action has already been taken to reduce fuel/ power consumption and cut down wastes. If we reduce our energy consumption by 10%, it will result in a saving of at least Rs. 20 billion.

It is high time that early action is taken to examine the different ways of solving the problem of energy crisis, and implementing appropriate actions, rather than simply increasing local fuel prices, as suggested by some theoretical economists, which would result in many problems to the people and to the government.

Traffic Congestion: A concerted effort need to be taken to reduce wastage of fuel by reducing traffic congestion. It has been reported that traffic jams cause an appreciable waste of fuel amounting to around Rs. 2 billion per year.

Rainwater Harvesting: Rainwater harvesting need to be promoted in large public buildings such as hospitals to reduce the use of treated water. A considerable amount of power is used to pump water for distribution. The amount of power used to pump water, an appreciable portion of which is used to wash vehicles, flush toilets etc. is substantial. Roof rainwater harvesting to obtain water for such purposes would reduce power used by National Water Supplies and Drainage Board in pumping water

Electricity Consumption: About 65% of electric power is thermal, and diesel is used as the source. Consumption of electricity in offices can be reduced to a considerable extent if the Heads of such Institutions take immediate action to cut down excessive/unnecessary use of electricity. Reducing consumption of electric power in offices and other public places would considerably reduce our expenditure on oil.

Stabilization of diesel prices

In view of all the undesirable repercussions a high diesel price would cause, it is important at the present juncture to stabilise the local prices of diesel. A portion of the finances necessary for this may be obtained by taxing heavily (such as a diesel tax) those who use diesel vehicles except buses and lorries. At present, even the luxury diesel vehicles get subsidised fuel.

Thus, there are many alternatives to petroleum. It is extremely important that early action is taken to examine the different ways of solving the problem of fuel crisis and implementing appropriate actions.

While developing petroleum alternatives, it is essential that action be also taken to reduce fuel/power consumption in the country...


Blogger sampanna said...

Dear Sir,

It was nice reading your article/blog.

In adding to the Generation of Electricity,Bio gas based Power generation from the Distilleries is also Lucrative options which adds to the Total Generating capacity as well yields higher Profit as Low cost of o & M as well Gas available is free. This system also yields Lower Payback.

This shud be having additional Scrubbing system that shud remove SULPHUR present in Bio gas.
For more details plz go through www.anamaenergies.com and contact Mr. Sampanna Shastry
E Mail: bangalore@anamaenergies.com  


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