Centre’s directive spikes Bihar’s ethanol plans

The latest decision by the Centre allowing only the existing sugar mills to produce ethanol directly from sugarcane juice has adversely affected the Bihar government’s efforts to revive the industrial sector and turn Bihar into an Ethanol hub.

Official sources said several industrialists who had earlier been willing to set up new sugar mills in Bihar or expand capacity of their existing mills have developed cold feet. Notably, all these projects had been cleared by the State Investment Promotion Board formed to promote investments in the state.
Expressing his concerns in this regard, Bihar chief minister Mr Nitish Kumar wrote to the Union minister for agriculture and consumer affairs, Mr Sharad Pawar on 9 June. In his missive, the CM wrote, “Since last two years, it has been the endeavor of this Government to revive this stagnate sector. You yourself visited Bihar with industrialists having interest in this… Some of the industrialists, who accompanied you on your visit also got their projects cleared from SIPB, but now they have developed cold feet. A few of them even got sites of the project shifted .. although the State Government supported them to invest in this sector”.

According to an official report, about 35 project proposals involving investment of around Rs 20,000 crore had been received by the state government, which mainly involved setting up of sugarcane juice based ethanol manufacturing units along with Greenfield sugar based complexes for manufacture of sugar as well as production of ethanol and related products with co-generation.

However, the new amendment in the Sugarcane Control Order, 1966 made by the Centre last December has just played spoil sport especially in the context of Bihar. The amendment grants power of manufacturing ethanol directly from sugarcane juice only to the existing sugar mills.

The CM in his letter said that the economy of Bihar is still agriculture based and the industrial activity in the State is yet to pick up momentum unlike Maharashtra, Gujarat and other southern states.

Therefore, it was planned to develop the state as an ethanol hub of the country and in order to facilitate the setting up of sugarcane juice based direct ethanol and other products manufacturing units, the government even initiated certain amendments to the existing legislation.

In addition to this, the Bihar Sugarcane (Regulation of Supply and Purchase) (Amendment) Bill, 2007 which was passed by the state legislature in March, 2007 itself is still pending for presidential assent, the letter mentions.
“However, to its dismay, the Government of Bihar learnt that the Ministry of Consumer Affairs, Food and Public Distribution, Government of India has amended certain provisions of the Sugarcane Control Order, 1966 in December, 2007 and a provision has been made that only existing sugar mills can produce Ethanol directly from sugarcane juice. This amendment of the Central Government has adversely affected the efforts of the State”, the CM said.