Numbers always manage to tell a story, even if those with a proprietary right may wish to withhold them. Pakistan’s ethanol export potential often escapes highlight – but the lack of interest is equally attributable to regulatory indifference as it is to producers’ reluctance to share details.
Ethanol is a derivative of molasses, a by-product of sugarcane crushing. And while sugar milling industry is often censured for its rent seeking behaviour, Pakistan’s annual ethanol export (HS Code 2207) is on average a $300 million business and is known to be commercially competitive in global markets.
Yet, questions surround the ethanol sector. BR Research’s four-month long efforts to request data on domestic ethanol production from industry association, PEMA (Pakistan Ethanol Manufacturers Association) proved to be in vain. Industry representatives remained elusive, insisting that data from member companies was not forthcoming.
Moreover, industry’s average ethanol yield is not easily estimable. While secondary research indicates that ethanol yield per ton of molasses may be as high as 28 percent, estimates from ethanol production figures shared in annual reports of listed players indicate that yield for one company may be as low as 18 percent.
Note that of the 18 registered association members disclosed on PEMA’s website, 8 companies are listed. And while listed players share annual production figures, quantity of molasses consumed during production is sparingly shared.
Figures on country’s annual molasses output available from Pakistan Sugar Manufacturer’s Association’s (PSMA) annual report present another interesting nugget. While country’s 82 operational mills have a highly variable sucrose (sugar) recovery rate – standard deviation of 1.02 with a range from 5.49 to 11.52 percent – molasses recovery rate reflects surprising consistency: 75 out of 82 mills report exact recovery rate of 4.50 percent, with others reporting very minor variation, at a standard deviation of less than 0.02.
Are Pakistan’s molasses figures underreported? That may come as no surprise as similar claims are often made about sugar production as well. But what about the ethanol market? In a conversation with BR Research, one PEMA representative had noted that Pakistan’s ethanol production is primarily geared towards exports with little to nil domestic demand.
Some of low-value molasses is exported as well with verifiable figures available from PBS. However, if ethanol export were to be used as proxy for domestic production, and then same used to reverse-engineering annual molasses consumption, the model nearly breaks down. Add to this, the estimate does not even account for molasses demand from domestic beverage (liquor industry), which would stretch molasses gap to even higher levels.
Unfortunately, thus, without solid numbers and research, Pakistan’s ethanol potential may remain untapped – not unlike myriad other possibilities. Is the industry association listening?
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