Bihar amends sugar Act to boost ethanol output
Business Standard
Ajay Modi / New Delhi April 06, 2007

The Bihar government has decided to allow production of ethanol
directly from sugarcane juice instead of the normal Indian practice of
processing sugarcane to produce sugar and using the molasses (a
byproduct) to produce ethanol.

"We have amended the Bihar Sugarcane (Regulation of Supply and
Purchase) Act, 1981, in March-end and now sugarcane juice can be
directly used for producing ethanol or rectified spirit and for
cogeneration", said Nitish Mishra, minister of state, cane
development.

The amendment also enables government to modify or alter the reserved
sugarcane area according to sugar mills' requirement. Further, payment
of cane to farmers has been made mandatory via cheques with the latest
amendment.

As sugar prices are unstable and the country is likely to face an
oversupply situation in sugar in the coming years, investors seem to
be shying away from new investments. They are finding it safer to
invest in distillery to produce ethanol or alcohol, Mishra added.

Bihar had a flourishing sugar industry some decades ago, but the
deteriorating law and order situation saw many companies pulling out
of the state. However, Chief Minister Nitish Kumar has been trying to
attract sugar companies to the state ever since he came to power.

The state has already bagged investments worth Rs 15,000 crore in
ethanol distillery and another Rs 4,500 crore in sugar since the state
government announced a new sugar-cum-ethanol policy for the state in
early 2006.

Leading sugar companies like Dhampur Sugar and Rajshree Sugar have
announced investments in the state. Mishra also said the Narkatiaganj
unit of C S Nopany's Oudh

Sugar has bagged orders for supplying 36,000 kilolitres of ethanol to
oil marketing companies for ethanol-blended programme in the state.

The Union ministry of petroleum has initiated a national programme for
5 per cent ethanol-blended petrol and is planning to increase it to 10
per cent.