India’s Bihar state seeks reversal of regulation that sugarcane ethanol producers must also refine sugar; revival of states sugar industry at stake

In India, the state government in Bihar is protesting a regulation by the national government that ethanol can only be produced at sugar mills if the mills also produce sugar. The state is attempting to revive 12 dormant sugar mills by converting them to ethanol production. Bihar acccounted for less than 2 percent of Indian sugar production in 2007, but has 15 closed mills that have been offered to the market. The government received bids for three of the closed plants from Reliance Industries and Hindustan Petroleum (HPCL). India recently overturned a 1966 ban on the production of ethanol from sugar.

Reliance Industries, Tata Chemicals, Bharat Petroleum, Hindustan Petroleum and Indian Oil are others among the ten companies bidding on the Bihar mills. 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.

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.

The E10 mandate has been championed by the Agricultural ministry, for one, as a means of handling the nation’s severe sugar overproduction. Sugarcane Minister Nitish Mishra said that “Bihar is sure to emerge as an ethanol hub“.

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