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Oil companies bar UP investors from Ethanol Tender

Uttar Pradesh Sugar Mills Association (UPSMA) has strongly opposed the Central government move to not include sugar mills of the state in supplying ethanol to oil companies.

The UPSMA has objected to the Expression of Interest (EoI) or tender for the procurement of ethanol issued by public sector undertaking oil marketing companies.

“We also note with concern the contents of the said EoI on several aspects related to supplies of ethanol by sugar mills in the state of Uttar Pradesh. We are surprised to see a paradigm shift in policy for procurement of ethanol by the oil marketing companies," the letter sent by the UPSMA to the Union Food & Public Distribution Ministry said.

The UPSMA letter, which was released to the media in Lucknow on Friday, said that UP was the top most ethanol manufacturing state but surprisingly the state had not been included and therefore distilleries in the state would not be able to take benefit of the bipartite and tripartite agreement during the next cane crushing season and as a consequence, the sugar industry would suffer heavy losses.

“We honour the endeavour of the government to encourage blending of ethanol with petrol, but to give priority for its procurement to new vendors is unjust with the existing vendors, who have dedicated ethanol manufacturing plants required as per specifications. The projects have been supported by the government's previous schemes. Therefore, equal preference should be given by oil marketing companies to the sugar mills of Uttar Pradesh," the UPSMA letter said.

The UPSMA said that almost 88 per cent of ethanol currently being supplied was made from molasses and sugarcane juice. It said 75-80 per cent of sugarcane was produced in three states, namely Uttar Pradesh, Maharashtra and Karnataka, and hence ignoring these states would be a big setback for the very ambitious ethanol blending programme.

The letter further said that it was pertinent to mention that the Union government had approved an additional ethanol capacity of around 8207 KL in Uttar Pradesh alone. It said with gross loan amount recommended for Rs. 7,071 crore, it was a matter of great concern for manufacturers regarding utilisation of this additional capacity, if adjoining states were bound for off take from their bipartite producing partners.



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