“We also note with concern the contents of the said EOI on several aspects related to supplies of Ethanol by Sugar Mills in the State of Uttar Pradesh. We are surprised to see a paradigm shift in policy for procurement of Ethanol by the Oil Marketing companies,” the letter sent by the Association to Joint Secretary(Sugar) , Department of Food & Public Distribution on Wednesday.
The letter says UP is amongst highest Ethanol manufacturing state but surpringly the State has not been included in the list of Deficit States, and therefore upcoming distilleries in the state would not be able to take benefit of the bipartite and tripartite agreement and as a consequence would UP is being discouraged.
“We honour the endeavour of the Government to encourage EBP due to its Environmental and Economic benefits, but to give priority in offtake to new vendors is unjust with the existing vendors who have dedicated Ethanol manufacturing plants required as per specification IS 15464:2004, which can only be used for blending purposes. The projects have been supported by Governments previous schemes and finances through the DFPD. Therefore, equal preference should be given by the Oil Marketing Companies to Ll bidders,” UPSMA letter says, which was releasedto the media here on Friday.
It may please be noted that almost 88% of the Ethanol currently being supplied is made from Molasses and Sugarcane juice/Syrup. Around 75-80% of the Sugarcane is produced in three States, namely Uttar Pradesh, Maharashtra and Karnataka. Therefore, ignoring major ethanol producing states shall be a big setback for the very ambitious Ethanol Blending Programme, UPSMA said.
As per notification no. dated 18-8.2021, DFPD issued an advisory Para No. (7), the Sugar Mills were advised to divert “Maximum Sugar to Ethanol to improve liquidity of Sugar Mills and also to stabilize Ex-Mill Prices of Sugar…” which in turn will further improve the revenue realisation of Sugar Mills and would address the problem of Surplus Sugar.
The letter further say that it is pertinent to mention here that DFPD has approved an additional Ethanol capacity of around 8207 KL in Uttar Pradesh alone (3375 KL grain based, 1057 KL Molasses based and 3775 KL dual base, both on grain and Molasses). With gross loan amount recommended for Rs. 7,071 Crore, it is a matter of great concern for manufacturers regarding utilisation of this additional capacity of 8207 KL, if the adjoining states shall be bound for offtake from their bipartite producing partners.
“We request that the OMCs may kindly be advised to follow the approved Government Policies on Ethanol. The EOI/s should be in co-relation with approved list of Ethanol Projects as per DFPD. The ‘Guidelines and SOP’ issued by the Banks should also be followed. It is requested that Purchase Agreements for the Producers willing to sign Long Term Agreement must be finalised so that their Projects do not suffer from delays,” UPSMA requested to the Centre.