Uttar Pradesh sugar mills seek to raise ethanol blending to 15 percent

To tide over the crisis, the Uttar Pradesh Sugar Millers Association (UPSMA) has urged the Centre to increase the blending percentage to 15% from the present 10% in the state, which is country’s top ethanol producer.The lockdown in the country due to Covid-19 has resulted in ethanol sales from Uttar Pradesh nosediving as demand from the oil companies has dipped. To tide over the crisis, the Uttar Pradesh Sugar Millers Association (UPSMA) has urged the Centre to increase the blending percentage to 15% from the present 10% in the state, which is country’s top ethanol producer.

In a letter written to the secretary, Food & Public Distribution, the secretary general of UPSMA, Deepak Guptara, has said that despite the most adverse and challenging circumstances, the sugar industry in UP has been in the forefront in taking care of the interest of the farmers. But at the same time, the industry is going through a major crisis as the sugar market remains sluggish.

“Lifting and sale of white sugar is negatively impacted and the dispatch problems at ports have resulted in poor raw sugar exports volumes too,” he states, adding that the off-take of ethanol by the OMCs has also been minimal due to the low demand for diesel and petrol during the lockdown period.

“In the interest of the Ethanol Blending Programme (EBP), we urge the government to consider increasing the blending percentage to 15% from the present 10% in the state of Uttar Pradesh,” the letter says.

It may be mentioned that the low off-take of ethanol from the sugar mills by OMCs has resulted in a lot of difficulties for the sugar mills as it is causing storage problems.

Interestingly, while chief minister Yogi Adityanath, had informed the state legislative assembly during the budget session in February, that the state’s ethanol capacity has increased to 1,126 million litres annually as a result of which it has emerged as the country’s top ethanol producer, the off-take by the OMCs has been abysmally poor so far.

In the two tenders floated by OMCs for the ongoing season, sugar mills in the country have offered to supply 1,857 million litres of ethanol against the total requirement of 5,114 million litres. Of the 1,552 million litres contracted till April 6, only 561 million litres has been supplied till that date, which is 36% of the contracted quantity.

As against this, UP sugar mills tied up contracts for 53.25 million litres of ethanol, out of which 12.29 million litres has been supplied, which works out to be a meagre 22%.

“These figures paint a very abysmal picture of the government’s ambitious plan to increase ethanol blending. The target to increase blending to 10% by 2022 seems unlikely. In 2018-19 season (Dec- Nov), the government achieved a mere 4.9% blending, which, as of today stands lower at 4.38% nationally. And if we take into account UP’s performance, it is way behind the all-India average. This, despite the fact, that UP’s sugar factories are doing much better than those in the rest of the country. While sugar mills in the country have produced nearly 22% less sugar till March 31, UP, on the other hand, has surpassed last year’s production of 95.67 lakh tonne,” said an industrialist, requesting anonymity.

It may be important to note that with excess production becoming a major issue in UP, mills in the state have taken a lead in urging OMCs to float a third tender for ethanol procurement. Isma has written a letter to the three OMCs, urging them to float a fresh ethanol procurement tender to help mills and distilleries supply more green fuel for blending with petrol and help reduce the oil import bill.