Indian sugar growers protest Bihar state non-payments with rail, road blockades; Bihar cash crunch raises questions about state’s ethanol development plans

In India, sugar cane growers established rail and road blockades to protest the non-payment of nearly $5 million that is owed to them by Bihar State. Noting the non-payment protests, the Bihar Times is asking how the Bihar State government is going to be able to finance its ambitious ethanol policy.

Bihar has indicated that it hopes to reactivate as many as 15 sugar mills to produce ethanol, although the central government has required that only mills that produce sugar and ethanol will receive a waiver from the 1966 Sugarcane Control Order which bans the direct conversion of sugar juice into ethanol fuel. Previously, ethanol could only be made from molasses.

The Bihar state government received bids for three of the closed plants from Reliance Industries and Hindustan Petroleum (HPCL). 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.

Sugarcane Minister Nitish Mishra said that “Bihar is sure to emerge as an ethanol hub“.

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