By Engineer Arshad H Abbasi and Engineer Musa Arshad

Pakistan’s sugar industry holds an overlooked solution to rising energy and fertilizer shocks. By scaling ethanol blending and using press mud as organic fertilizer, the country can cut imports, boost resilience, and turn a recurring sugar surplus into a strategic national asset.

As global energy markets grow increasingly volatile, Pakistan finds itself dangerously exposed. With most of its crude oil and fertilizer imports tied to the Middle East, geopolitical instability is no longer a distant concern—it is an immediate economic threat. Against this backdrop, a compelling opportunity lies within the country’s own borders: the sugar industry.

The Pakistan Sugar Mills Association (PSMA) on 29th March 2026 urged the government to allow the export of surplus sugar and move toward deregulation, citing heavy financial losses despite a bumper production year. But beyond export policy lies a far more strategic question: can Pakistan transform its sugar surplus into a pillar of energy security and agricultural resilience? The answer lies in ethanol and the broader ecosystem of byproducts that the sugar industry already produces.

Sugar mills in Pakistan primarily produce refined sugar from sugarcane while simultaneously processing the byproduct, molasses, to produce high-value ethanol for export. In Pakistan, ethanol is primarily known as a biofuel or ethanol within the energy sector, specifically regarding E10/E20 petrol blending. In industrial and chemical contexts, it is referred to as rectified spirit or alcohol, while in the beverage industry, it is the core component of IMFL (Indian-made foreign liquor). Regardless of the application, it is increasingly recognised as a sustainable, sugar-derived fuel valued for its cleaner-burning properties. Many sugarcane mills are vertically integrated with distilleries that convert this byproduct into ethanol, yielding significant export revenue, often exceeding US$300 million annually at relatively low incremental cost. Pakistan is already a significant global exporter of ethanol, yet paradoxically continues to import expensive petroleum. This disconnect reflects a policy gap. Unlike countries such as the United States, Brazil, and India, Pakistan has not implemented a meaningful ethanol blending program. While others have embraced blends like E10 and E20 (20% ethanol in petrol), Pakistan’s fuel mix remains almost entirely fossil-based.

Around the world, ethanol blending is now standard practice. The United States uses E10 nationwide, while Brazil has long operated high ethanol blends and, as of March 2026, is testing E35 fuel. India has already achieved a 20% ethanol blending rate in petrol (E20), demonstrating how quickly a coordinated policy push can transform an energy landscape. These examples show that ethanol is not theoretical; it is a proven, scalable solution that Pakistan can adopt with its existing industrial base.

Ethanol blending offers a direct path to reducing Pakistan’s import bill. Petrol blended with ethanol is typically cheaper per liter, and although ethanol has a lower energy density, its lower price often results in reduced overall fueling costs. At scale, this could save billions in foreign exchange. The sugar industry already generates over Rs 1,000 billion in economic activity and contributes significantly in taxes and import substitution as PSMA claims. Expanding ethanol use domestically would amplify these benefits while stabilizing an industry often burdened by surplus production.

At the same time, the sugar industry can play a critical and often overlooked role in addressing Pakistan’s fertilizer challenges. The ongoing war in Iran and tensions in the region have disrupted global oil and gas supplies, particularly through the Strait of Hormuz. This has led to sharp increases in energy prices, which directly affect fertilizer production because natural gas is a key feedstock for nitrogen-based fertilizers such as urea. A large share of global urea production is concentrated in Middle Eastern countries including Saudi Arabia, Qatar, Oman, the United Arab Emirates, and Iran. Any disruption in this region immediately translates into higher prices and potential shortages for countries like Pakistan that rely on imports or gas-linked production.

Here again, the domestic sugar industry offers a partial but meaningful solution. In addition to molasses, sugar mills produce a substantial quantity of press mud, also known as filter cake. Pakistan’s sugar industry generates approximately 1.2 to 1.8 million tonnes of press mud annually across roughly 80 to 90 mills. This byproduct, typically produced at a rate of 3 to 9 percent of cane crushed depending on the milling process, is rich in organic matter and essential nutrients, including nitrogen, phosphorus, potassium, and micronutrients. As an organic soil amendment, press mud can reduce dependence on imported chemical fertilisers, improve soil health, and enhance crop yields over time.

In a country facing both rising fertilizer costs and soil degradation, the systematic use of press mud as organic fertilizer represents a practical and immediately available intervention. When combined with ethanol production from molasses, the sugar industry effectively becomes a dual contributor to both energy and agricultural security. It reduces the need for imported fuel while simultaneously easing pressure on the fertilizer supply chain.

Pakistan’s current energy model remains concentrated and vulnerable. Heavy reliance on imported fuels exposes the country to geopolitical disruptions and price shocks. Ethanol, being domestically produced from renewable feedstock, offers diversification and resilience. Similarly, leveraging organic byproducts like press mud can reduce exposure to volatile global fertilizer markets. Together, these pathways form a broader strategy of self-reliance rooted in existing domestic capacity.

There is also a strong environmental dimension. Ethanol burns cleaner than petrol, reducing emissions of carbon monoxide, hydrocarbons, and particulate matter. In Pakistan, where fuel adulteration is a major contributor to air pollution and smog, ethanol blending can improve fuel quality and combustion efficiency. Meanwhile, the use of organic fertilizers like press mud reduces the environmental footprint associated with synthetic fertilizers, including soil degradation and water contamination.

Pakistan’s sugar industry is technically ready for this transition. Ethanol production processes are already well established, and mills have the flexibility to shift between sugar and ethanol depending on market conditions. The additional utilization of press mud requires relatively low technological intervention but can deliver high agronomic value. What is missing is not capability but coordination and policy clarity.

Past attempts provide important lessons. Pakistan experimented with E10 petrol in 2009–10 in Sindh and Punjab, but the initiative was discontinued. In January 2025, the government again moved toward approving a policy for blending up to 10% ethanol with petrol, aiming to reduce reliance on imported fuel and promote renewable energy. However, progress has been slow due to regulatory inertia and limited technical understanding within key institutions such as the Oil and Gas Regulatory Authority.

Leadership can make the difference. Asif Ali Zardari, with his deep familiarity with the sugar industry and his consistent emphasis on climate change, is in a unique position to champion a national ethanol blending strategy. By aligning stakeholders and setting clear targets, he could push Pakistan toward achieving a 20% ethanol blending rate in petrol within a defined timeframe. Such a move would reduce dependence on imported fuel, conserve foreign exchange, mitigate the impact of global energy shocks, and contribute to climate goals while also indirectly easing fertilizer pressures through better utilization of industry byproducts.

Pakistan stands at a crossroads. It can continue to rely on imported energy and fertilizer inputs, remaining vulnerable to external shocks, or it can leverage its domestic industries to build resilience. The sugar sector, through ethanol and organic fertilizer production, offers a ready-made solution. The opportunity is immediate, practical, and grounded in existing capacity. The only remaining question is whether policymakers will act decisively enough to turn this potential into reality.

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Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the official position of the Centre for Research and Security Studies (CRSS).