Indian sugar mills association

Up Mills Vexed As Govt Bars Et

Date:	21 Jun 2011

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News ID:	574

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LUCKNOW: Uttar Pradesh sugar mills are in financial trouble as the state government stops permission to transport ethanol/molasses, their top revenue earner after sugar, out of mill compound. The state government had wanted to impose a cess but when the high court overruled it, the government stopped issuing transportation permits. Mills are now burdened with large stocks and overflowing tanks, while customers, especially the oil companies that blend ethanol with petrol, watch haplessly. Uttar Pradesh sugar mills have contracted to supply 26 crore litres of ethanol of which 9.5 crore litres has been shipped till now. With permits no longer being issued, millers cannot complete the contract and are about to lose their bank guarantees. "Denatured ethanol comes under the mandate of the union government and state governments have no control over it. Millers have already made commitments and entered into contracts for supply of ethanol as per the prevailing policy then. The sugar industry in Uttar Pradesh would suffer huge losses due to the non-issuance of transport permits," said Indian Sugar Mills Association director general Abinash Verma. Owners of a few private mills said some mills were recently raided at the behest of a liquor lobby. Liquor is a big revenue earner for the state. Mill owners said such raids would ensure there is a steady supply of molasses at cheaper rates for producing potable alchol. The 5% mandatory ethanolblending program not only saves foreign exchange but is also seen as beneficial to cane farmers. The ethanol-blending program has been conceived to increase the use of environment-friendly ethanol and it directly benefits farmers following a union government directive in 2010 that ethanol can only be produced from domestic molasses alone. But Uttar Pradesh, the second largest producer of ethanol in the country, has stopped issuing permits for the transport of ethanol to neighbouring states. The Mayawati government had tried to impose an administrative charge of .`10 per quintal for captive consumption of molasses by sugar mills which was challenged by millers in the Lucknow bench of the Allahabad High Court. The court order favoured the mills. The state government has filed a special leave petition in the Supreme Court which was heard on May 12 and has now been listed in July. After the state government failed to levy the administrative charge due to the high court order, it stopped issuing permits for the transport of ethanol from this April. For Commodities news updates, follow ET on Twitter PREVIOUS STORY Maharashtra mills crush largest volume of cane Maharashtra sugar mills crushed the largest quantity of cane in state’s history this season. The mills have crushed 801 lakh tonne cane till Saturday. 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