UP govt takes on Centre's move on ethanol

After opposing the Centre’s initiative to contain sugar prices by importing raw sugar last year, the Mayawati-led Uttar Pradesh government has now come in the way of yet another central initiative on blending ethanol with oil by not issuing permits for ethanol.

The move follows a Allahabad high court order in March that struck down the state government’s imposition of an administrative charge on molasses being transported by sugar mills to distilleries outside the mill complex. The government had imposed an administrative fee of Rs 10 on every quintal of molasses. The writ petition was filed before the Lucknow bench of the court by sugar mill owners.

The state government filed a special leave petition before the Supreme Court against the order. The apex court did not grant a stay during the first hearing on May 12. The matter will come up for hearing in the third week of July.

“The companies with permits issued before the first week of April are supplying ethanol to oil companies for blending. Even these will expire by June 30. We have ethanol stock but are not able to supply,” said an industry insider. In early 2010, the UP government had not allowed entry of imported raw sugar in the state to thwart the Centre’s efforts to control sugar prices.

Last month, the state government had sealed three distilleries belonging to Bajaj Hindusthan and one each of Triveni Engineering, Dhampur and Dalmia on the pretext of irregularities.

Mills may have to face penalties for not supplying ethanol under the take-or-pay clause in the contract with the oil companies.

Uttar Pradesh is India’s second biggest ethanol producing state after Maharashtra. Of the 59 crore litres contracted by the oil marketing companies, about 17 per cent comes from the state. Ethanol from UP is supplied to Delhi, Punjab, Haryana, Chandigarh and Rajasthan.

Sugar industry insiders say the arm-twisting is being done to ensure adequate supply of molasses for country liquor — a major revenue earner for the state.

On June 7, a sugar industry delegation had to meet state excise department officials and ensure that the demand of the liquor industry is met.

After the assurance the delegation had also requested the department to start issue of permits for ethanol, but the situation has not improved. Molasses is the raw material for both country liquor and ethanol.