UP to partner Centre for ethanol blending in fuel to cut oil import bill

The state, along with Maharashtra, clocks 9-10% of blending due to higher cane availability

Uttar Pradesh, the country’s top sugarcane producer, has offered to partner the central government over its ambitious roadmap of augmenting ethanol blending in fuel.

UP chief minister Yogi Adityanath, who met union petroleum and natural gas minister Dharmendra Pradhan in New Delhi yesterday, said the state was ready to cooperate with the Centre to promote ethanol blending in fuel to save foreign exchange and cut oil import bill.

Major states like Maharashtra, Uttar Pradesh, Uttarakhand, Punjab-Haryana and Karnataka have clocked more than 8.5 per cent ethanol blending, with Maharashtra and UP having achieved nine per cent or even more, owing to the high availability of sugarcane.

Of late, the Adityanath government has been encouraging greenfield and brownfield ethanol production capacities in the state, both in the public and private sectors. Adityanath also urged Pradhan to increase the number of green fuel (PNG and CNG) retail outlets in the state. He also requested for more fuel stations in the state expressways, both operational and proposed, including Agra-Lucknow Expressway, Purvanchal Expressway and Bundelkhand Expressway.

According to industry sources, private sugar mills in UP have lined up capital investment worth Rs 1,500 crore to boost ethanol production capacity. Mills belonging to the Triveni, Dhampur, Balrampur and Dwarikesh Groups are collectively projected to install fresh ethanol capacity of about 1,200 klpd (kilo litres per day).

In fact, UP's sugar sector accounts for nearly 30 per cent of the fresh ethanol capacity addition underway, while Maharashtra tops the list with a 40 per cent share. In all, the country’s sugar mills have proposed investments worth more than Rs 6,000 crore to upgrade their plants for producing ethanol from sugarcane with Maharashtra alone accounting for nearly Rs 2,250 crore of the capex, followed by UP.

Besides, public sector behemoth Indian Oil Corporation (IOC) is setting up a greenfield ethanol plant in Gorakhpur for Rs 800 crore. The unit will come up on the land of a defunct state cooperative sugar mill.

Further, the state government has proposed to hand over two other co-operative sugar mills in Pilibhit and Ballia districts to private sector, after bidding, for establishing modern sugar complexes with investment of Rs 400 crore each, thus totalling Rs 800 crore.

“Since, oil marketing companies (OMC) announce their ethanol requirements in the month of August, an ‘attractive’ ethanol policy should be announced around the same time by the central government,” Indian Sugar Mills Association (ISMA) director general Abinash Verma had recently told Business Standard.

A few months back, the OMCs had floated fresh tender for procurement of 910 million litres (ML) of ethanol. In 2018, the OMCs requirement of ethanol for blending with petrol stood at 3,136 ML and for the 2019 season, the same had been estimated at 3,300 ML.

IOC is the top buyer of ethanol with 46.6 per cent share, followed by Hindustan Petroleum (HP) and Bharat Petroleum (BP). In this sugar season, 5.8 per cent of ethanol blending has already been achieved, while 90% of ethanol is being produced from C heavy (70 per cent) and B heavy (20 per cent).