Chief minister Nitish Kumar’s move to ban liquor in Bihar has an unintended beneficiary — the BJP-led central government’s ethanol blending programme that is being promoted by Prime Minister Narendra Modi. The liquor ban has prompted sugar mills in the state to produce fuel ethanol from molasses instead of extra neutral alcohol for the potable liquor industry. Consequently, the mills in Bihar have pledged to supply as much as 6.4 crore litres of ethanol for blending with petrol in the current marketing year through October 2017, 16 times more than just 0.4 crore litres they sold to oil marketing companies (OMCs) in 2014-15 when there was no prohibition.
So from a minor player before the liquor ban, Bihar has emerged as the fourth-largest supplier of ethanol to OMCs, ahead of even larger sugar producers like Tamil Nadu and Andhra Pradesh, according to the latest expression of interest (EoI) floated by OMCs to invite producers to commit supplies for blending with petrol at the stipulated 5:95 ratio.
The Bihar government had, through a notification, formally imposed a ban on the sale of any kind of liquor in the state from April 2016 — in the middle of the 2015-16 marketing year. So supplies from the state for the blending programme jumped to 4 crore litre in 2015-16 from a meagre 0.4 crore litre in the previous year. However, 2016-17 will witness the first full-year impact of the ban.
Prior to the ban, the Bihar government was allowing only 5% of molasses to be converted to ethanol, while the rest was meant for the production of extra neutral alcohol, sugar mills say.The ethanol blending programme was first mooted in 2003 and endorsed by the central government at various stages subsequently. However, the Modi government has been promoting the use of blended fuels — aimed at trimming oil imports proportionately and reducing pollution levels — more vociferously.