Indian government says only sugar producers can make ethanol directly from sugar; 15 Bihar projects in jeopardy

In India, the central government has confirmed that new regulations allowing the conversion of sugar juice into ethanol apply only to sugar producers, and not to specialized ethanol plants, which must still use molasses as a feedstock. The Bihar state government said that the ruling would mean the loss of up to fifteen new ethanol plants proposed for the sugar-rich state.

Bihar state was forced to re-auction 60-year leases on 10 abandoned sugar mills after bids were not received on three and seven bids did not meet the reserve price. Five mills were successfully leased to Reliance Industries, Hindustan Petroleum, Rollcon Projects and SS Infrastructure were successful in their lease bids.

The facilities would be used to increase ethanol production to meet the Indian government’s existing E5 mandate and proposed E10 mandate scheduled to take effect in October 2008.

Bihar has indicated that it hopes to reactivate as many as 15 sugar mills to produce ethanol, although the central government has required that only mills that produce sugar and ethanol will receive a waiver from the 1966 Sugarcane Control Order which bans the direct conversion of sugar juice into ethanol fuel. Previously, ethanol could only be made from molasses.

In India, sugar cane growers established rail and road blockades to protest the non-payment of nearly $5 million that is owed to them by Bihar State. Noting the non-payment protests, the Bihar Times is asking how the Bihar State government is going to be able to finance its ambitious ethanol policy.

India is projected to have a surplus of 11.5 million tonnes, based on a projected 33.15 million tonnes harvest this year, which would be a world record for national sugar production. Recently, 10 sugar-producing states have agreed to a framework for a national E10 mandate. India’s sugar crop this year is expected to exceed 29 million metric tons. With domestic consumption at 19 million tons and exports at 1.5 million tons, the country is turning to ethanol production to avoid a catastrophic sugar glut.

Sugarcane Minister Nitish Mishra said that “Bihar is sure to emerge as an ethanol hub“.

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