A sugar factory in Bihar. Picture by Ajit Kumar Verma

Patna, Feb. 20: Much to the relief of sugar factory owners of Bihar, the state government has started working on a policy on ethanol production.

“We are working out the policy details so that sugar factories do not face any problem if they intend to produce ethanol. The policy would be finalised by March-end and its benefits would be available to the sugar factories of Bihar from the next financial year,” excise department minister Bijendra Yadav told The Telegraph.

The minister’s assertion assumes significance because there is no such policy in place in Bihar at present. The sugar factories opting for ethanol production have to seek permission of the excise department for supplying it.

Terming the development a positive one, Bihar Sugar Mills Association (BSMA) secretary Naresh Bhatt said: “We hope the government will keep the points raised by us in mind while finalising the policy document.”

A member of BSMA, who holds a senior position in one of the sugar factories in north Bihar, said: “The formulation of policy document would be a big relief for sugar producers, as they would have a prior knowledge of things while planning to utilise the byproduct.”

He said the policy related to ethanol would ensure the excise department issues permits for supply of ethanol produced by sugar factories in a short time.

The sugar factories of Narkatiaganj, Hari Nagar and Riga had to wait for more than eight months to procure permit from the excise department for supplying 15 lakh litres of ethanol they had produced after entering into an agreement with petroleum companies. Ethanol is used as a blender in petrol.

The Telegraph, in its January 7 edition, had carried a report highlighting the plight of the sugar factories as they were facing the threat of paying fine to petroleum companies for delay in supplying ethanol. The permit for supplying ethanol was issued recently by the excise department.

Keeping this problem in mind, BSMA had recently submitted a list of demands to the state government. One of their major demands was permission to use 20 per cent of the molasses, a byproduct of sugar industry, for producing ethanol.

The demand was made as ethanol carries a better price tag than spirit made from molasses. While a litre of ethanol fetches around Rs 27, the corresponding price of a litre of spirit in Bihar is Rs 24. Sugar industry sources said the price of ethanol was likely to go up to Rs 32 per litre in the next few months, making its production more attractive for sugar factory owners of the state. The excise department, however, has not yet made up its mind as far as the percentage issue is concerned.

“Such details would be worked out after deliberations and we would also go through the policies of some other states before finalising things. At present, a high-level committee headed by the chief secretary is studying the proposals,” Yadav said.

He said the excise department was also considering a proposal related to rate revision of spirit.

The BSMA had demanded an upward revision of the price of spirit also. It said a litre of spirit should be priced at Rs 30.