KARACHI, June 26: The country for the first time in its history is importing molasses to meet domestic shortage face by distilleries producing ethanol, and the first consignment of 10,000 tons is expected to arrive from Iran by sea in the second week of next month.
Industry sources said that due to lower sugar output this year molasses production also remained poor, creating shortage for distilleries. Another factor for importing molasses, they said, was non-availability of quality molasses which should have at least sugar contents up to 45 per cent.
“Never before in the history of Pakistan have molasses been imported. On the contrary we had been net exporters and met the demand of most European countries for the last over half a century,” Terminal Association of Pakistan Chairman Mohammed Kasim Hasham told Dawn.
Despite the fact that the country has a sizeable quantity of molasses but it was not up to the mark to meet the specification of distilleries whose requirement of sugar contents stands above 45 per cent. The best quality is considered to have 50 per cent sugar contents.
The sources said that the crushing season 2004-05 had been very bad for the sugar industry, and with the exception of two units having large distilleries, almost all the units suffered financial losses. Mr Hasham said the industry last year produced a little over four million tons of sugar, but this year (2004-05) around three million tons had been produced.
In order to meet the entire seasonal demand of molasses under the enhanced processing capacity of distilleries, more letter of credits (L/Cs) are being opened and there is a rush of enquiries with importers for shipments so that the demand is met up to the next crushing season which may start late November or early December this year.
About two years ago, Pakistan exported around 100,000 to 125,000 tons of molasses to India where the sugarcane crop fell short of target and most of its distilleries went dry.
Another factor for the shortage of quality molasses in Pakistan is that more and more distilleries are coming up and sugar units in order to meet the economies of scale are entering into by-products.
On an average, the country produces around 2.2 million tons of molasses per annum, but this season (2004-05) around 1.55 million tons have been produced and after adding to it the carryover stocks total available stocks of molasses stood at 1.7 million tons.
The estimated consumption of molasses (by distilleries for converting it to ethanol of different grades) is 1.2 million tons, but it all depends on how much of the required grade having sugar contents above 45 per cent will be available for this season.
However, the country so far has made physical shipments of around 0.270 million tons with export commitments in hands of 0.110 million tons and around 0.220 million tons are lying with Keamari terminals and sugar mills. This means that the country has already exported around 0.280 million tons out of total available quantity for export of 0.600 million tons for this season.
At present seven distilleries with an annual production capacity between 7,000 and 33,000 tons per unit are operating in the country. Besides, four to five more units of ethanol producing distilleries are in the pipelines, which indicates that in coming years the country will have to do all-out efforts to increase the sugarcane production for not only meeting sugar demand but also for molasses.
The average price of molasses in the world market is presently quoted at around $94 to $96 per ton (FOB), whereas the ethanol price for natural grade (96 per cent) and extra natural grade (97pc-98pc) ranges between $500 and $525 per ton and for fuel grade (99pc) purity, the price is $600 per ton.
Kasim Hasham told Dawn that many inquiries were being received for the import of molasses because many distilleries feared shortage before the turn of new crushing season.
He said the government’s decision of allowing import of raw sugar would help the industry in reducing their running cost. However, he was critical about the way sugar crisis were handled and said: “We expose our weak position of shortage prior to taking any decision that results in higher prices in the world market.”
Against this, he said, India never exposed its stocks position and quietly entered the world market to replenish its stocks of any commodity which fell short of demand in its domestic market. Consequently, it avoids paying extra money.
Citing an example, Mr Hasham said that three months ago sugar prices in the world market were being quoted at around $298 per ton but they suddenly jumped up to $300 per ton on news that Pakistan was short of the commodity and would be entering the market. “We should be careful about our figures and should not allow other to exploit us by making us to pay higher price,” he suggested.
