States urged to help boost ethanol supply, financial health of sugar mills

Minster of consumer affairs, food and public distribution Ram Vilas Paswan has urged states to ease restrictions on the supply of ethanol so that its blending with petrol can be encouraged and thereby improve financial health of sugar sector so that mills are able to liquidate cane dues of farmers.

In a communication to chief ministers of major sugarcane growing states, Paswan said despite the several steps taken by the central government to restore financial health of sugar sector, including interest-free loans for liquidation of cane dues besides incentive for export of raw sugar, cane dues that sugar mill owe farmers continued to mount.

In view of the challenges confronting the sugar sector and mounting cane arrears, the government of India, has also modified the ethanol blending policy (EBP) so as to facilitate achieving of 5 per cent blend with petrol, he pointed out.

He said on the centre's part, it has fixed remunerative prices to encourage the industry to supply ethanol to the oil marketing companies (OMCs). The tendering process has been dismantled. However, it has been observed that the expected response to the new EBP has not been forthcoming. There are significant transaction barriers which impede smooth supplies of ethanol for blending. In several states, governments not only imposes levy on molasses but also regulates the movement of non-levy molasses, he said. 

''Inter-state movement of ethanol requires NOCs from the state excise authorities along with permits from dispatching and receiving states. Most states impose `export/import' duties on ethanol leaving and entering their boundaries. There are some instances where octroi is levied on ethanol for entry into municipal limits.''

Paswan said such transactions barriers are impeding the successful implementation of EBP and adversely affecting the financial health of the sugar industry and the cane farmers.

He urged the states to ensure that the barriers which are impeding the implementation of EBP are dismantled as the EBP can help industry to attain viability at a time reportedly surplus of sugar and facilitate liquidation of cane dues arrears of farmers.