Indian sugar mills association

State fails to issue permit for sale of ethanol

Date:	06 Jan 2012

Source:	The Telegraph

Reporter:	Sanjeev Kumar Verma

News ID:	840

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Patna, Jan. 6: The state government never missed an opportunity to attack the Centre over its policy decision of not allowing setting up of industrial units which produces ethanol only using sugarcane as the raw material. But it has apparently failed to take care of the interest of sugar factories of Bihar, which are allowed to produce ethanol as a byproduct.

The plight of sugar factories of Narkatiaganj, Hari Nagar and Riga is a case in point. Having entered into an agreement with petroleum companies, these three sugar factories had produced around 15 lakh litres of ethanol around seven months ago. But even after repeated requests, the excise department has not issued permits to supply ethanol, forcing the factories to keep the huge stock with them.

Bihar Sugar Mills Association (BSMA) secretary Naresh Bhatt said the association had already brought the matter to the notice of the state government.

Even the sugarcane industry department is pursuing the issue. Department principal secretary C.K. Mishra told The Telegraph: “We are seized with the issue and have brought the matter to the notice of the excise department. The department has assured us of early solution to the problem.”

Giving reasons for the delay, excise minister Bijendra Prasad Yadav said certain issues have to be addressed before giving such permission. “Things have now been sorted out and the permission would be given soon,” he added.

The sugar producers of Bihar do not appear to be much enthusiastic about the assurance given by Yadav.

“The minister had issued a directive to issue permits at a meeting held in August last year but the department officials did not issue the permits. We hope that the assurance given by the minister proves correct this time,” a BSMA member said.

His frustration appears genuine as non-supply of ethanol, which is used as a blender in petrol, to petroleum companies would attract penalty to the sugar factories.

The BSMA member said the excise department was not issuing the permit as few of its officials were of the opinion that the production of rectified spirit, which is used for liquor manufacturing, would be more beneficial than the production of ethanol. “If the government is allowing views of such officials to hamper our work, then how can it criticise the Centre for putting obstacles in the production of ethanol?” asked the BSMA member.

As far as the economics of ethanol and rectified spirit is concerned, a litre of ethanol gives Rs 26.5 to its producer, whereas one litre of rectified sprit carries a price tag of Rs 24.

In terms of revenue, the state government would get 4 per cent of the ethanol price as value added tax, whereas sale of 12,000 litres of rectified sprit fetches revenue of Rs 8 lakh to the state government because it is used for manufacturing several more litres of liquor. One litre of rectified sprit is required for manufacturing 18 litres of liquor.

“If the government wants us to produce rectified spirit only, then it should increase its rate controlled by the excise department. In Bengal, the sale of a litre of rectified spirit fetches Rs 32,” said the BSMA member.

Ethanol is not the only issue, which is hampering the cause of sugar producers of Bihar. Prices of molasses, too, are an issue that BSMA wants the government to look into.

In Bihar, the sugar factories get Rs 190 for a quintal of molasses, whereas in Karnataka and Maharashtra, the producers get a rate of around Rs 300 per quintal. In Punjab the rate is Rs 700 per quintal.

“We face problems because sugar imported from other states is sold at cheaper rate and the government has turned down our demand of imposing entry tax on sugar coming from other states. The government should at least look into our demand for increasing the prices of molasses, which will help in reducing the production cost and compete with sugar producers of other states,” said a senior official of a sugar factory in Gopalganj district.

Of an estimated annual requirement of around 8 lakh tonnes of sugar, Bihar produces a little over 4 lakh tonnes. Sugar producers of other states like Maharashtra and Karnataka supply sugar to meet the local demand.

The price difference of one quintal of sugar produced in Bihar and other states varies between Rs 250 and Rs. 300. Once the imported sugar comes to the market, local producers are forced to slash prices.

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