Dhamendra Pradhan to launch IOC's Rs 800-cr ethanol project in Gorakhpur

Union petroleum minister Dharmendra Pradhan will lay the foundation of an ethanol plant being set up by the Indian Oil Corporation (IOC) in Gorakhpur district of Uttar Pradesh.

The unit is proposed to be set up on 50 acres of land in the premises of the now-defunct Dhuriapar Co-operative Sugar Mill in the pocket borough of chief minister Adityanath. It will entail an investment of Rs 800 crore.

Pradhan would be accompanied by the chief minister for the foundation laying ceremony scheduled in the last week of August, UP principal secretary Sanjay Bhoosreddy told Business Standard here today.

Earlier, the state cabinet had cleared the proposal of transferring 50 acres to state owned IOC on a 30 year lease, which would also fetch the exchequer Rs 65 lakh per annum as rent. On the expiry of lease, IOC would hand over the plant to the UP Sugar Federation without any outstanding debt/payment liability.

IOC would set up a second generation ethanol plant, which employs latest technology to produce biofuels from farm residue, including cane byproducts for mixing in fuel. In contrast, first generation plants extract biofuels directly from sugar and vegetable oils through conventional technology.

Boosting ethanol production is the long term agenda of the petroleum ministry for promoting the use of greener fuel by mixing ethanol in petroleum products. This would not only cut vehicular emissions but also pare the high oil import bill, which is currently in excess of Rs 5 trillion annually.

Besides, diversion of a part of sugarcane for ethanol production would also insulate the domestic sugar sector from its cyclical nature and provide a cushion during bumper sugarcane seasons.

In fact, the Adityanath government is looking at total investment of Rs 1,600 crore in upgrading three defunct UP co-operative sugar mills for ethanol production.

Apart from the Gorakhpur project, two other cooperative mills in Pilibhit and Ballia districts are proposed to be handed over to the private sector for establishing integrated sugar complexes with investment of Rs 400 crore each, thus totalling Rs 800 crore. Each of these units is expected to generate 8,500 fresh job opportunities and benefit 8,000 cane farmers.

Currently, of the 174 approved ethanol products in India totalling more than Rs 9,000 crore, 34 projects worth Rs 2,379 crore are proposed to be set up in UP, which is the country’s top sugarcane, sugar and ethanol producer.

In 2016-17, UP's ethanol production stood at more than 420 million litres (ML), which jumped to 654 ML in 2018-19. In the current year, till June 2019, the state had already clocked ethanol output of 220 ML.

Every year, UP requires nearly 420 ML of ethanol for blending in fuel, while it is targetting ethanol production of about 820 ML, thus indicating its robust excess ethanol capacity for supplying to other states.